Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Private Bills [Lords] (Standing Orders not previously inquired into complied with),

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bills, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:

Bootle Corporation Bill [Lords]

London County Council (General Powers) Bill [Lords].

London Gas Undertakings (Regulations) Bill [Lords].

West Surrey Water Bill [Lords]

Bills to be read a Second time.

Droitwich Canals (Abandonment) Bill [Lords],

As amended, considered; to be read the Third time.

Oral Answers to Questions — TRADE AND COMMERCE.

FRANCE (BRITISH RIBBON).

Major-General Sir Alfred Knox: asked the President of the Board of Trade, whether the Anglo-French Trade Agreement expires this month; and, if so, whether, in negotiating a new agreement, steps will be taken to give some measure of protection to the manufacturers of British ribbon?

The President of the Board of Trade (Mr. Oliver Stanley): The answer to the first part of the Question is in the negative. Notice of denunciation of the

Agreement can be given at any time, to take effect at a prescribed later date. His Majesty's Government have no present intention to denounce it, but the position of United Kingdom manufacturers of ribbon will be carefully considered in the event of any discussion for its revision.

Sir A. Knox: If it is not possible to raise the import duty, would it be possible to establish a quota, taking the year 1932–33 as the basis, since the difficulties of the British producer are not due to the French import trade, but to Japanese imports?

Mr. Stanley: As my hon. and gallant Friend knows, various discussions are now going on with the French, and I should not like to anticipate the result.

Mr. Day: What amount of notice is required?

Mr. Stanley: A quarter.

MILK (PRICE, GLOUCESTERSHIRE).

Mr. Lipson: asked the President of the Board of Trade whether he will draw the attention of the Food Council to the fact that since:1st May farmers in Gloucestershire are receiving less for their milk, but no corresponding reduction has been made in the price of milk to consumers in the borough of Cheltenham?

Mr. Stanley: I have asked the Food Council to look into the matter, but the hon. Member will understand that neither the Council nor I have any compulsory powers in such a matter.

Mr. Lipson: While thanking my right hon. Friend for his answer, may I ask him whether he will also call the attention of the Food Council to the fact that it was announced last autumn that the price would be 6d. a quart in May and June, whereas 7d. is being charged, and that the producer is receiving only 1od. a gallon, whereas the consumer is being charged 2s. 4d.?

Mr. Stanley: That appears to be exactly the kind of information for which the Food Council will ask.

WEIGHTS AND MEASURES REGULATIONS.

Mr. Westwood: asked the President of the Board of Tirade whether the promised review of the existing regulations


under the Weights and Measures Acts has been completed; and, if not, when it is likely to be?

Mr. Stanley: The review of the regulations under the Weights and Measures Acts to which the hon. Member refers is now well advanced, but has brought to light a number of problems which will require further consideration. I can assure the hon. Member that the work will be completed as rapidly as circumstances permit.

Mr. Westwood: Can the right hon. Gentleman give any indication when the review is likely to be completed?

Mr. Stanley: I am afraid I cannot. The House will realise that from time to time my Department is very urgently engaged on urgent war preparations, which interfere with normal proceedings of this kind. I am pushing on as fast as I can, but these urgent matters must take precedence.

Mr. Leach: For what war is the right hon. Gentleman preparing?

Sir Nairne Stewart Sandeman: Would it not be better to go into the question of the weights and measures themselves, with the idea of introducing the decimal system?

CALCIUM CARBIDE.

Mr. Ellis Smith: asked the President of the Board of Trade whether he is aware of the urgent need to deal with the problem of the amount of calcium carbide produced in this country; and what steps are being taken to increase the production?

Mr. Stanley: I would refer the hon. Member to the answer given to his two questions on this subject on 25th April.

PROCESSED MILK (IMPORT LICENCES).

Mr. R. Morgan: asked the President of the Board of Trade whether it will be a definite condition of licences granted to importers under the Agricultural Marketing Order dealing with processed milk that the said importers shall conform to the terms and conditions of sale fixed for home-produced processed milk by the appropriate trade associations?

Mr. Stanley: I have no reason to doubt that the arrangements already made will, with the co-operation of the proposed International Conference, achieve the object in view, and, as at present ad-

vised, I am not prepared to attach a definite condition of this character to the issue of a licence.

FILM INDUSTRY.

Mr. Day: asked the President of the Board of Trade particulars of any further recommendations that have now been made to him by the Films Council for the purpose of introducing legislation to vary the quota clauses of cither the exhibitors or renters who are so affected; and what action he proposes to take?

Mr. Stanley: I have nothing to add to the answer which I gave to the hon. Member on 4th April.

Mr. Day: In view of the great difficulty that both exhibitors and renters in the trade are experiencing in complying with these quotas, will not the right hon. Gentleman ask the Films Council to look further into the matter?

Mr. Stanley: I have no doubt that the Council will make a further report before the date on which statutory action has to be taken, and no doubt by that time they will have had sufficient experience of the working of the Act.

Mr. Day: Is the right hon. Gentleman aware that many cinema theatres will be closed before that date?

CHILE.

Mr. Higgs: asked the President of the Board of Trade whether he is aware that import licences for Chile are difficult to obtain, and that not only the Government but also the Exchange Control Commission prefer that business should be transacted with France, Germany, or Italy, which have compensation agreements; and does he intend to take steps to rectify the matter?

Mr. Stanley: The Government of Chile have stated that the find themselves compelled to restrict the issue of licences for United Kingdom goods because the amount of sterling available in Chile is unfortunately insufficient to meet the demand. The question of the steps to be taken to meet the situation is being considered carefully in all its aspects in consultation with the Government of Chile.

Mr. Higgs: Is the Minister aware that our exports to Chile have decreased by 75 percent. since 1927, while imports from Chile have practically remained constant?

Mr. Stanley: I do not think that that gives a true picture unless one looks at the detailed statement showing the description of exports and imports between the two countries. If the hon. Member does that, he will see that we have a favourable balance of trade with Chile taking account of the position as regards copper.

Mr. Benson: Have not the compensation agreements with other countries been sufficiently satisfactory to warrant their extension to Chile?

Mr. Stanley: It is not a question of compensation agreements, but of being able to take enough from Chile to provide them with the sterling to take our exports.

EXPORT TRADE.

Miss Ward: asked the President of the Board of Trade whether he intends to act on any of the suggestions contained in the report on export trade presented by the Association of British Chambers of Commerce?

Mr. Stanley: As my right hon. Friend the Secretary to the Department of Overseas Trade informed a representative deputation from the association in February last, His Majesty's Government are in full sympathy with the objects of the report, namely, the promotion of this country's export trade and the restoration of the freedom of international trade to the greatest possible extent, as well as with the view expressed that the fullest use should be made in trade negotiations of this country's buying power; though I would add that in pursuing this policy His Majesty's Government must consider the case of each country by itself. I could not undertake within the compass of a Parliamentary answer to deal with the numerous particular suggestions contained in the report, but the hon. Lady can be assured that they will be borne in mind with a view to their being applied so far as is found practicable and appropriate.

Miss Ward: In view of the importance of the recommendations and the increase in value of our export trade, would my right hon. Friend consider arranging, through the proper channels, a debate, in order that the details may be considered?

Mr. Stanley: A debate was arranged through the ordinary channels the week

before last on the Estimate of the Board of Trade, and the whole question of the export trade was discussed by hon. Members who were then present.

Miss Ward: Could we have a debate on the specific recommendations which are made in the report on this matter?

Mr. Stanley: I think an opportunity was taken then to refer fully to the different methods to be adopted to help our exports.

BREAD (PRICE).

Mr. De la Bère: asked the President of the Board of Trade whether he will draw the attention of the Food Council to the present price of bread compared with the present price of wheat, which is the lowest since 1931 and ask them to consider whether the present official price of flour does not call for a reduction in the present price of bread?

Mr. Stanley: The Food Council keep a continuous watch on the relation between the prices of wheat, flour and bread. The present price of bread in the London area is in accordance with the scale recommended by the Council relating the price of bread to that of flour.

Mr. De la Bère: Is my right hon. Friend aware that in the London area the price-fixing association of the Millers' Mutual manipulates the official price, that in the provincial areas there are insufficient concerns outside the price-fixing associations to ensure a genuine price, and that the whole thing is entirely fictitious and false?

Mr. Stanley: A long report on this matter was published by the Food Council only a short time ago. If my hon. Friend has any particular points to bring to my attention, I should be glad to hear of them.

Mr. De la Bère: Is my right hon. Friend aware that those who are on the Food Council to protect the. interests of the consumers are suffering from a complete unawareness of the situation?

INTERNATIONAL SUGAR COUNCIL.

Mr. de Rothschild: asked the President of the Board of Trade whether he can make any statement as to the circumstances which have made it necessary for the International Sugar Council to meet in


London this week; whether it will discuss a request of the British Government for the expediting of sugar exports from Empire countries to Great Britain; whether this request was communicated to the delegates of the countries represented on the council; and which delegates declined to accede to it?

Mr. Stanley: As I informed the House on 23rd May, in answer to a question by my hon. and gallant Friend the Member for Cardiff, South (Captain A. Evans), a meeting of the International Sugar Council was called for 13th June to consider the recommendation of the council's Executive Committee that part of the additional sugar required during the current quota year should be obtained by increasing the quotas of the British Dominions and Colonies by 153,000 metric tons. The council had before it at this meeting a letter from the United Kingdom Government formally asking the council, under the terms of Article 51 (b) of the International Sugar Agreement, to remedy the shortage of supplies. The additional quotas were approved by the council unanimously on 14th June.

Mr. de Rothschild: Is the right hon. Gentleman taking any steps to have the International Sugar Agreement implemented, so that other countries shall not use it to delay this country?

Mr. Stanley: I do not accept the suggestion. The increased quota has been agreed to, and agreed to unanimously.

Mr. Thorne: If they have not complied with the Government's request, what action are the Government taking?

Mr. Stanley: I said that they have complied with our request.

GREECE.

Mr. Bellenger: asked the President of the Board of Trade whether he can now make any statement regarding the negotiations conducted in Greece by the Leith-Ross Commission?

Mr. Stanley: The discussions to which the hon. Member refers are being continued in London; but I am not in a position to make any further statement.

Mr. Bellenger: Has the right hon. Gentleman any idea whether these discussions will be brought to an early and successful termination?

Mr. Stanley: I could not say that. I hope the conclusion will be both early and successful.

HORSES (EXPORT).

Sir Percy Harris: asked the President of the Board of Trade whether, in view of the considerable increase during the first five months of this year in the export of horses, he can give the names of the countries which are importing them; and whether there is reason to believe they are being imported for war purposes?

Mr. Stanley: Exports of horses from the United Kingdom totalled 1,220 in the first five months of this year, as compared with 901 in the corresponding period of 1938. It has not been possible, in the time available to prepare a statement showing the countries to which these animals have been sent, but I have no reason to believe that they are being imported for war purposes.

Sir Waldron Smithers: Is my right hon. Friend aware that a great many horses are being exported from Southern Ireland?

Mr. George Griffiths: Are there any from New Zealand?

WHEAT (MILLING FACILITIES).

Mr. De la Bère: asked the President of the Board of Trade whether he will introduce legislation to prohibit and prevent the purchasing and closing down of mills in the rural areas by the large milling combines in view of the national importance of the retention of these mills?

Mr. Stanley: I have nothing to add to the reply given to my hon. Friend on 14th June by the Chancellor of the Duchy of Lancaster.

Mr. De la Bère: Is my right hon. Friend aware that unless immediate action is taken there will be one vast combine controlling all the milling interests, and the country will be exposed to danger in times of emergency and will be looted from end to end in times of peace?

Mr. Stanley: I think that the facts do not bear that out.

Mr. De la Bère: The exact reverse is the case.

Oral Answers to Questions — MERCANTILE MARINE.

STEAMSHIP "EMPRESS OF BRITAIN."

Lieut.-Commander Fletcher: asked the President of the Board of Trade whether the facts concerning the death in 1938 of Mr. James Richmond, on board the "Empress of Britain," have been brought to his notice; and what was the cause of death?

Mr. Stanley: The death of James Richmond, a member of the crew of the steamship "Empress of Britain," at Manila on 17th March, 1938, was the subject of a statutory inquiry held under Section 690 of the Merchant Shipping Act, 1894, on 1st June, 1938, at the Mercantile Marine Office, Southampton. The statement in the log of the cause of death, which was signed by the senior surgeon of the vessel, showed that the cause of death was acute gastro-enteritis, and the superintendent, as a result of his inquiry, certified that he found this statement correct and true.

Lieut.-Commander Fletcher: Has it been brought to the right hon. Gentleman's notice that in the entry in the log it was stated by the medical officer that the cause of death was gastro-enteritis due to cholera germ, and that that fact was brought to the notice of the officers of the ship and of the superintendent of the line, but that it was concealed? Has the right hon. Gentleman any information as to that?

Mr. Stanley: That is not my information. My information is that the senior surgeon signed the log showing that the cause of death was gastro-enteritis, and that he supported that at the inquiry which was subsequently held.

Lieut.-Commander Fletcher: Is the right hon. Gentleman aware that the medical officer of the ship, while admitting the facts stated by the right hon. Gentleman, further certified that he informed the officers of the ship and the authorities of the line that the death was due to cholera germ; and that in fact the officers of the ports which the ship subsequently visited were notified of that fact?

Mr. Stanley: No, Sir; that does not agree at all with the information given to me as to what the senior surgeon said at the inquiry which was held under the Merchant Shipping Act.

Lieut.-Commander Fletcher: Will the right hon. Gentleman make some further inquiry into the matter?

SUBSIDY (GOVERNMENT PROPOSALS).

Miss Ward: asked the President of the Board of Trade whether, in the necessary legislation to give effect to the Government's proposals for British shipping, he proposes to make any subsidy retrospective?

Mr. Storey: asked the President of the Board of Trade whether he can now make any statement with regard to his proposal to make an annual grant of £2,750,000 to tramp shipping; and when the first payments under this scheme will be made?

Captain Arthur Evans: asked the President of the Board of Trade (1) whether he can now say at what rate, under what conditions, and in what circumstances a subsidy will be payable in respect of voyages of tramp ships;
(2) whether he is aware that the announcement by the Government of its intention to assist tramp shipping has made international co-operation in the shipping industry more difficult, in spite of the fact that no financial help has yet been given to British vessels; and whether he will introduce at an early date the necessary legislation to authorise the payment of a subsidy?

Mr. Stanley: Legislation will be introduced and full details of the schemes will be laid before Parliament as soon as possible.

Miss Ward: Will my right hon. Friend bear in mind that in normal circumstances the legislation would probably have been introduced earlier; and will he give consideration to the possibility of making the subsidy retrospective?

Mr. Wedgwood Benn: Is the right hon. Gentleman at the present time making promises or gifts of public money without any statutory authority?

Mr. Gallacher: Is there any intention, when the Bill is introduced, of providing a subsidy for old age pensioners?

COASTAL MARKS, BEACONS AND LIGHTS.

Mr. Rathbone: asked the President of the Board of Trade who is responsible for the erection, maintenance, and repair of coastal marks, beacons, and lights, for


which both Trinity House and the Development Commission disclaim all financial liability?

Mr. Stanley: While it is within the power of the general lighthouse authorities to provide and maintain aids to navigation on or near the coasts of Great Britain and Northern Ireland, expenditure by those authorities is normally restricted to such aids as will be of benefit to general navigation. Aids to meet solely the needs of local navigation are provided by harbour authorities or other local interests. If my hon. Friend will inform me of the aids to navigation which he has in mind, I will inquire into the matter.

Mr. Rathbone: Is my right hon. Friend aware that there are several marks for which everyone disclaims all responsibility? Such a mark is that on the Cannis Rock, off the Gribben Head, which has been a bone of contention locally for over half a century. Does not my right hon. Friend consider that it is time a general review was undertaken of all marks, buoys and so on, with a view to ensuring that they are all properly provided for by one body or another?

Mr. Stanley: My hon. Friend mentioned the Cannis Rock; he has given me the kind of information for which I asked, and I will certainly inquire into that point.

ARGENTINE TRADE.

Mr. Storey: asked the President of the Board of Trade whether he is aware that the proportion of British ships chartered from the Argentine has continued to decline; and what action the Government propose to take to deal with this loss of trade?

Mr. Stanley: I hope that the Government's proposals for the assistance of the British shipping industry, including the tramp shipping subsidy, will enable British ships to maintain and extend their share of world trade.

SHIPS (FOREIGN PURCHASERS).

Mr. Denville: asked the President of the Board of Trade whether he is aware that the price offered by foreign buyers for British ships is in excess of that obtainable in the home market; and whether, therefore, he is still advising that British ships should not be sold to foreign buyers in view of the delay in

introducing legislation for the assistance of British shipping?

Mr. Stanley: I am informed that in some cases higher prices are being offered for British ships from abroad than are obtainable in the home market. Since the House approved a Supplementary Estimate for the purpose of acquiring a reserve of tonnage, the Merchant Ship Reserve Advisory Committee has been constituted and the committee is now considering offers of ships for the Reserve. Pending my decision in particular cases, in the light of the committee's advice, I consider it preferable that in existing circumstances British ships should not be transferred to foreign flags.

Mr. Bellenger: Will the right hon. Gentleman give the House an assurance that the inflated prices being offered by foreign nations will have no effect on the prices that are to be paid out of this fund?

Mr. Stanley: I quite agree with the hon. Member. The matter will be kept closely in mind. Any offer will be related to the value of the ship to us, and not to what might be offered by foreign countries.

OXFORD GROUP.

Sir W. Smithers: asked the President of the Board of Trade whether, in connection with the licence granted to Mr. Buchman's association to be designated as the Oxford Group, he will insist on an audited balance sheet being produced without delay, of all sources of receipts and all details of expenditure since the formation; and will he place a copy of the audited accounts in the Library of the House?

Mr. Stanley: The effect of incorporation under the Companies Act, 1929, will be to place the Oxford Group in the same position with regard to accounts as any public company incorporated under the Act, in that it will be required to lay before its members in general meeting an income and expenditure account and an audited balance sheet not later than 18 months after incorporation, and subsequently once at least in every calendar year. A copy of the audited balance sheet is required to be included in the annual return of the company, which


must be filed with the Registrar of Companies, and documents so filed are available for public inspection. I see no reason for imposing exceptionally on the association any condition beyond these statutory obligations.

Sir W. Smithers: Does not my right hon. Friend think it would be advisable, in view of the criticisms which have been made in this House, that an opportunity should be given, and, if possible, taken, of either substantiating or refuting those criticisms?

Mr. Stanley: I am not prepared to treat these people in any exceptional manner; they will have to fulfil the ordinary obligations attaching to any public company. With regard to any allegations that may have been made, if such allegations have been made by subscribers to the fund I should have thought that the obvious course would be for the subscribers themselves to ask that an account should be sent to them.

Mr. Mathers: Will the same publicity be given to the financial transactions of the political party to which the hon. Member belongs?

FOREIGN SHIPS (UNITED KINGDOM CARGOES).

Miss Ward: asked the President of the Board of Trade what has been the nationality, and the number of ships of each nationality, which have discharged cargoes in the United Kingdom for Government account during the period 1st January, 1939, to the 31st May, 1939?

Mr. Stanley: With the exception of one ship which brought wheat from Rumania, under arrangements of which the House is aware, no foreign ships arriving in the United Kingdom between 1st January, 1939 and 31st May, 1939 were chartered by the Government. Certain foreign ships have, however, arrived with cargoes purchased by trade organisations for Government account when afloat or after shipping arrangements had been completed by private shippers. I am circulating in the Official Report a list showing the nationality and number of ships concerned. I am not in a position to give complete particulars of ships which carried cargoes purchased by the

Government on c.i.f. terms, of purchases under running contracts, or of coastwise shipments.

Miss Ward: In view of the necessity for doing everything that is possible to encourage British shipping, will my right hon. Friend have an inquiry made into the whole question whether it would be possible to carry more goods in British bottoms?

Mr. Stanley: I do not think an inquiry is necessary. I have said that no foreign ships are chartered by the Government, but, as I have explained before, in dealing with a matter like this it is often necessary to purchase cargoes afloat, and in such cases, of course, the nationality of the ship may be foreign.

Miss Ward: I did not mean that the inquiry should be limited simply to Government-chartered ships, but that it should extend to all ships.

Mr. Stanley: I have recently received a long communication from the British shipping interests on this matter, and it is after consideration of their representations that legislation is being introduced.

Following is the list:

Nationality and number of ships which arrived with cargoes for Government reserves between 1st January, 1939, and 31st May, 1939, so far as details are available:

British
…
…
…
43


Norwegian
…
…
…
5


Greek
…
…
…
4


Yugo-Slavian
…
…
…
1


Belgian
…
…
…
1


Rumanian
…
…
…
1


Latvian
…
…
…
1


German
…
…
…
1

JAPANESE MERCHANT SHIPS (FACILITIES, BRITISH PORTS).

Commander Bower: asked the President of the Board of Trade the number and tonnage of Japanese ships availing themselves of fuelling and storing facilities in British ports between Japan and Europe in the course of the last year for which figures are available?

Mr. Stanley: I regret that there are no official statistics from which the information could be obtained.

Commander Bower: Does that mean that in deciding what measures are to be taken against Japan His Majesty's Government are unable to determine because of this lack of information whether steps should be taken against Japanese shipping?

Mr. Stanley: No, Sir. There are no complete official statistics, but some idea could be got.

Mr. G. Griffiths: What difference is there between Japan and Spain?

Mr. Mander: Is it not the case that if these facilities were no longer available to the Japanese Government, it would cause them considerable inconvenience?

Mr. Stanley: That is another question.

CIVIL DEFENCE (VOLUNTARY AID DETACHMENTS).

Sir A. Knox: asked the Secretary of State for War whether he will consider the granting of an allowance to nursing members of the Voluntary Aid Detachment to enable them to purchase their uniforms before joining up?

The Secretary of State for War (Mr. Hore-Belisha): As stated in an answer given to my hon. and gallant Friend the Member for Sevenoaks (Colonel Ponsonby) on nth May last, an annual grant at the rate of £1 a head is made to the Voluntary Aid Detachment Council for the provision of uniforms for nursing members. The arrangements for the provision of uniform are left to the council to decide.

Sir A. Knox: Does not my right hon. Friend agree that this allowance is quite insufficient to provide the uniform for these people who wish to join up?

Mr. Hore-Belisha: No, Sir, that is not what was understood. I have answered the question. I think the allowance was decided upon after discussion.

Sir A. Knox: The allowance of £1 is insufficient to provide the uniform in peace time.

BRITISH ARMY.

TERRITORIALS AND MILITIAMEN (DISABILITY AWARDS).

Mr. E. Smith: asked the Secretary of State for War on what scale are the

Territorials and Militiamen and their dependants to be compensated should they receive an injury, or be incapacitated, or sustain permanent disablement while on service?

Mr. Hore-Belisha: A Territorial or Militiaman who is injured or otherwise contracts a disability while on service will be treated like a regular soldier during the period of embodiment or initial training, and, if discharged as permanently unfit for further service on account of an attributable disability, will be eligible for a disability award under the ordinary pension code applicable to regular soldiers.

Mr. Silverman: In the case of disputed claims will there be any opportunity of third party judgment, or will the War Office and the Ministry of Pensions continue to be the judge in their own case?

Mr. Hore-Belisha: The position will be, as I have stated, on all fours with that of the regular soldier.

Mr. Buchanan: Will an injured man have any personal right of appeal, or of appearance, either by himself or with a representative, before any board that decides his compensation?

Mr. Hore-Belisha: No, Sir. there is no court at all. His case will be on all fours with that of the regular soldier.

Mr. Buchanan: Can the Secretary of State for War state why this man is treated differently from anyone in civil life or who served in the Great War by having no right of personal appearance or of representation when the case is decided?

Mr. Hore-Belisha: There was an opportunity of discussing that matter on the Bill. I have answered the question on the Paper.

BRIGADE OF GUARDS (DRUMMER-BOY'S ILLNESS).

Mr. A. Edwards: asked the Secretary of State for War why disciplinary action was taken against the drummer who collapsed during the recent trooping of the colour?

Mr. Hore-Belisha: The Commanding Officer considered that the man had committed a technical offence, and admonished him. The record has since been expunged.

Mr. Edwards: Can the right hon. Gentleman say whether any responsible officer announced before parade that disciplinary action would be taken? Does he specifically deny that?

Mr. Hore-Belisha: I have no knowledge of any such thing.

Mr. Edwards: You will not deny that such a statement was made?

Mr. Hore-Belisha: I am not denying or confirming it.

Mr. Edwards: Will the right hon. Gentleman make inquiries?

Mr. Hore-Belisha: Certainly.

Mr. Gallacher: Is action to be taken against the officer if the inquiry proves that disciplinary action was taken by him?

RETIRED OFFICERS' SERVICE.

Lieut.-Colonel Heneage: asked the Secretary of State for War whether the new regulations governing the promotion of Army officers apply to officers of the Regular Army Reserve of Officers returning voluntarily or otherwise for re-employment, and if so, will they be entitled to count their previous service?

Mr. Hore-Belisha: No, Sir. The service of retired officers while re-employed will not reckon for promotion, retired pay or gratuity. Officers who retired after 1st August, 1938, have, of course, already benefited by the "new conditions of service."

SCOTSMEN, MANCHESTER.

Mr. Fleming: asked the Secretary of State for War whether he has considered the communication signed by the chair man of the Manchester Scottish Societies with reference to the formation of a Territorial Scottish battalion in that city; and what steps he intends to take in the matter?

Mr. Hore-Belisha: It is not possible, at the present time, to fit into the organization of the Territorial Army a new Scottish battalion in Manchester, in addition to the battalions already authorised.

Mr. Fleming: Is my right hon. Friend aware that already over 700 young men of Scottish descent have signed a requisition to form such a battalion in Manchester, so that after finishing their military training under the Military Training

Act they can join a. Territorial Unit with a Scottish title?

Mr. Hore-Belisha: There are plenty of vacancies for these 700 young men in Lancashire if they will joint existing units.

BREN GUN.

Mr. Day: asked the Secretary of State for War to what extent the output of the Bren light machine-gun has been increased to meet the needs of the Army; and what reports he has received as to the manufacture of these weapons in Canada, Australia, and South Africa?

Mr. Hore-Belisha: The output of Bren guns is steadily increasing, but the hon. Member will not expect me: to give figures. Satisfactory reports have been received in regard to the progress of the new plant in Canada. Manufacture in Australia and the Union of South Africa is not being undertaken on behalf of His Majesty's Government in the United Kingdom.

Mr. Day: Can the right hon. Gentleman say whether the manufacture of this gun is taking place in India?

Mr. Hore-Belisha: No, Sir.

Mr. Lawson: What progress is being made?

Mr. Hore-Belisha: Progress with regard to material is proceeding in Canada approximately according to schedule, so I am informed.

DIETARY.

Mr. G. Griffiths: asked the Secretary of State for War whether the militiamen who are now being called up are having the same amount of butter in their rations as the Regular Army, which is one ounce per day, or are the militia men having margarine in the diet for breakfast every day?

Mr. Hore-Belisha: Militiamen will receive the same rations as Regular Army troops, including one ounce of butter and half an ounce of margarine a man a day.

Mr. Griffiths: Is the Secretary of State for War aware that the diet list hung up at Colchester Camp provides for margarine for these militiamen on Sunday, Monday and Tuesday mornings, and no butter at all?

Mr. Hore-Belisha: If the hon. Gentleman wishes to call my attention to any


reform which it is desirable to institute, I shall be very glad to consider it, but I understood that he was very pleased about the butter.

Mr. Griffiths: I am delighted about the butter, and I want these lads to have butter instead of margarine. They are having margarine on these mornings, and will the right hon. Gentleman see that they get butter?

Mr. Turton: asked the Secretary of State for War whether he is aware that the 69th Field Regiment of Royal Artillery were, on 10th and nth June, 1939, when in camp at Otley Chevin, served with boiled eggs of Estonian origin, and that the eggs were unfit for human consumption; and whether he will take the necessary steps to secure that the Army in future is fed on home-produced new-laid eggs?

Mr. Hore-Belisha: Eggs are bought by messing officers from a cash allowance, and, on the occasion in question, eggs of Estonian origin were provided. I am informed that they were quite good, and that there were no complaints. It is not proposed to interfere with the discretion of messing officers in such matters.

Mr. Turton: Is my right hon. Friend aware that, when the shells were removed, the eggs were bright green in colour, and that there is great dissatisfaction about the origin of eggs supplied to the Army from all over the country?

Mr. Hore-Belisha: In justice to Estonia, I must correct that statement, because at the end of the meal it appears that there were a number of eggs left over, and the men asked that they should be allowed to consume them, and did. It is known that one man actually ate five of these eggs.

Mr. G. Griffiths: Is he still alive?

Mr. Hore-Belisha: The officers also ate some of the same supply of eggs, and the whole battalion is still flourishing.

MILITARY TRAINING (TEACHING POSTS).

Mr. Edmund Harvey: asked the Secretary of State for War whether consideration will be given to the position of militiamen in training who are candidates for teaching posts so as to permit special leave of absence to be accorded when it is necessary for the purpose of interviews?

Mr. Hore-Belisha: All militiamen will be given due consideration in this respect.

Mr. Harvey: Will the right hon. Gentleman bear in mind the special need, at the end of August and the beginning of September, of those who intend to be teachers? It is a very special case.

Mr. Hore-Belisha: Yes, Sir.

TERRITORIAL UNITS (STRENGTH).

Mr. Pilkington: asked the Secretary of State for War which Territorial Associations now have all their units up to establishment?

Mr. Hore-Belisha: Twenty-five Territorial Army Associations administering 95 units or detachments have all their units up to establishment, and I will, if I may, circulate the list in the Official Report.

Mr. Logan: Is one, the Irish Brigade, in Liverpool?

Mr. Hore-Belisha: It will be seen from the list.

Following is the list:

Territorial Army Associations that have all their units up to establishment.


Berwick.
Kinross.


Buckingham.
Kirkcudbright.


Caithness.
Lincoln.


Cambridge and Isle of Ely.
Nairn.



Northumberland.


City of London.
Orkney.


Clackmannan.
Roxburgh.


Dumfries.
Rutland.


East Lothian.
Selkirk.


Fife.
Sutherland.


Flint.
West Lothian.


Inverness.
Westmorland.


Kincardine.
Wigtown.

Mr. Pilkington: asked the Secretary of State for War how many men are still required by the West and East Lancashire Territorial Associations?

Mr. Hore-Belisha: The numbers required on 10th June to bring the Territorial Army units of the East and West Lancashire Territorial Army and Air Force Associations up to establishment were 296 officers and 3,615 other ranks, and 274 officers and 1,398 other ranks, respectively.

TELEPHONE OPERATOR, BLANDFORD CAMP.

Mr. Keeling: asked the Secretary of State for War whether he is aware that the telephone operator of Bryanston


School, aged 19 years, has been appointed telephone operator at Blandford Camp, now under construction, at £4 per week of 48 hours plus 4s. an hour for overtime, which will normally bring his emoluments to 8 a week; whether he proposes to take any action; and whether work of this kind could be given to ex-service men?

Mr. Hore-Belisha: The telephone operator is a contractor's employéat the camp now under construction at Blandford. I am informed that he receives no overtime pay, but that he is paid at an inclusive rate of £4 a week, covering all time worked. The contract contained, in accordance with usual War Office practice, a request to the contractor to employ ex-service men as far as possible.

Mr. De la Bère: Is not one of the reasons why the land is so denuded of young men the fact that these contractors are able to pay higher wages than the farmers?

ARMAMENT FACTORIES.

Sir William Jenkins: asked the Secretary of State for War what number of new armament factories have been erected; what number of extensions; what number completed; and what number in course of construction since 1935 to date, giving particulars for England, Scotland and Wales, separately?

Mr. Hore-Belisha: Details are not readily available for new factories and factory extensions undertaken by private firms. For Royal Ordnance Factories and other Government factories, the numbers of new factories completed during the period mentioned in the question are:

England
…
…
…
3


Scotland
…
…
…
1


Wales
…
…
…
Nil

and the numbers under construction are:

England
…
…
…
5


Scotland
…
…
…
2


Wales
…
…
…
4

Extensions have been undertaken at most of the factories, but they vary so greatly in size and importance that any figures would be misleading.

Lieut.-Colonel Sir William Allen: Will the right hon. Gentleman consider giving the figures in regard to Northern Ireland?

Mr. Hore-Belisha: I am not sure that the answer would be very satisfactory to the hon. and gallant Member, but I will certainly answer the question if he puts it down.

Mr. Noel-Baker: Do these figures include Government ordnance factories and the factories of private firms which have been built at the public expense?

Mr. Hore-Belisha: They include only the ordnance factories. There are a considerable number in addition erected by private firms.

Mr. Noel-Baker: With Government capital?

OFFICERS.

Mr. Parker: asked the Secretary of State for War why all cadets finishing their course are being passed out from Sandhurst this year into the Army with no examination; and why any need to satisfy a shortage of officers cannot be met by raising suitable candidates from the ranks instead of thus lowering the qualifications for entering the officer corps?

Mr. Hore-Belisha: Cadets of the present senior and intermediate terms at both Woolwich and Sandhurst, including some who have previously served in the ranks, are being commissioned early in July in order to provide additional officers to assist in the training of militiamen. This has necessitated cancellation of the final term examination at Sandhurst. There are no final term examinations at Woolwich. All cadets will, however, have qualified at the normal tests held during the terms, and no cadet will be commissioned who has; not satisfied the Commandant that he has reached a satisfactory standard.

SCOTLAND.

SMALL HOLDINGS (EQUIPMENT).

Mr. Leonard: asked the Secretary of State for Scotland whether he is satisfied that the smallholdings in Scotland are equipped with up-to-date appliances suitable to their respective requirements?

The Under-Secretary of State for Scotland (Mr. Wedderburn): New holdings constituted since 1912 by the Department of Agriculture for Scotland are equipped with suitable dwelling-houses and other permanent buildings readily adaptable by


holders to the particular branch of development proposed to be followed. In the case of other holdings the Department may provide assistance by way of loan towards the cost of improving or rebuilding dwelling-houses or other buildings. The provision of movable or less permanent appliances for the working of a holding is a matter for the tenants. If the hon. Member has any particular type of case in view, perhaps he will be good enough to communicate with me.

Mr. Leonard: Is it not desirable that information should be gathered in order to ascertain whether the help which is being given is suitable?

Mr. Wedderburn: I think it is, but if the hon. Member desires any further information perhaps he will put down a further question.

SCHOOLS (MILK).

Mr. Gallacher: asked the Secretary of State for Scotland the number of schools in Scotland where liquid milk is provided; and whether there are any elementary schools where it is not being provided?

Mr, Wedderburn: On 31st March, 1939, the latest date for which figures are available, liquid milk was provided in 1,888 grant-earning schools in Scotland. There were 1,252 grant-earning primary schools in which liquid milk was not being provided at that date.

Mr. Gallacher: Will the Under-Secretary impress upon these other schools the necessity of providing liquid milk?

Mr. Wedderburn: Yes, Sir, that is our policy, but most of these schools are small country schools where it is not possible to get a supply of certified milk.

Mr. T. Johnston: May I ask whether the number of schools which are not supplying liquid milk is an increasing or a decreasing number?

Mr. Wedderburn: I could not say whether it is an increasing or a decreasing number without notice.

Mr. Boothby: Is it not the case that schools which are not providing milk are, on the whole, smaller than the schools which provide the milk?

Mr. Wedderburn: Yes, Sir, that is implied in my answer, and the number of

children having milk over the country as a whole is about 360,000, which, I think, is an increase.

TUBERCULOSIS.

Mr. Gallacher: asked the Secretary of State for Scotland the total number of patients receiving treatment for tuberculosis at the last convenient date; and the number of persons who have been awaiting treatment for more than 10 days on that date from local authorities in Scotland?

Mr. Wedderburn: The number of patients receiving treatment under the tuberculosis schemes of local health authorities in Scotland in sanatoria or other institutions on 31st December, 1938, the most recent date for which figures are available, was 4,607. As regards the second part of the question, I regret that the information asked for is not available.

Mr. Gallacher: Is the Under-Secretary aware that there is a considerable shortage of effective sanatoria accommodation in Scotland, and that there are a great many patients waiting for attention? Will he take up this matter with a view of providing the necessary finance for a wide extension of sanatoria accommodation?

DISTRIBUTION OF POPULATION (COMMISSION'S REPORT).

Mr. W. Joseph Stewart: asked the Prime Minister whether he can now state when the report of the Royal Commission appointed to inquire into the question of the distribution of the industrial population will be ready?

The Chancellor of the Exchequer (Sir John Simon): I have been asked to reply. I am afraid there is nothing further to add to the reply which the Prime Minister gave on 2nd May to the hon. Member for Chester-le-Street (Mr. Lawson).

Mr. Stewart: Can the right hon. Gentleman not give the House an approximate date when this important report may be expected, as it is of immense importance to people both inside and outside this House?

Sir J. Simon: I fully appreciate the importance of the matter. The answer previously given was that the Royal Commission were considering their report, but that they were not able to say when it would be completed.

Sir P. Harris: Does not the right hon. Gentleman realise that the problem of the location of industry is intimately connected with Civil Defence, and in the light of the work of the Lord Privy Seal will he press the Royal Commission to publish a report in some form without delay?

Sir J. Simon: I think the Royal Commission must be the judge as to when their report is ready for publication. I quite understand the importance of the matter.

BANK OF ENGLAND.

Mr. De la Bère: asked the Chancellor of the Exchequer whether, with a view to consolidating the Bank of Eng land as a national institution, he will introduce legislation to clearly define the relations and obligations of the Governors of the Bank of England to the Government of the day?

Sir J. Simon: No, Sir.

Mr. De la Bère: Is the right hon. Gentleman aware that things which have been satisfactory in the past are not necessarily satisfactory to-day? Is it not clear that it is very desirable that the relations and obligations of the Bank of England to the Government of the day should be made quite clear and free from any ambiguity?

Sir J. Simon: The argument as to the moment when conservatism passes into liberalism is always disputed.

CZECHO-SLOVAKIA (ASSETS).

Sir John Mellor: asked the Chancellor of the Exchequer if he is in a position to state whether it is the intention of the Government that all established claims against the assets covered by the Czecho-Slovakia (Restrictions on Banking Accounts, etc.) Act, shall rank pari passu or otherwise; and whether he can give an indication of the procedure to be adopted for settlement?

Sir J. Simon: It is the intention of the Government to obtain protection for British holders in respect of financial claims on Czecho-Slovakia, but I am not at present in a position to state the detailed principles on which claims will be dealt with or the procedure to be adopted.

Sir J. Mellor: Can my right hon. Friend give any indication as to whether the holders of bonds are to be compensated on the basis of their face value or on the basis of their market value on some selected date?

Sir J. Simon: That is one of the many questions which have to be considered.

Mr. Noel-Baker: asked the Chancellor of the Exchequer why, since it is the principle that the policy of the Bank of England in its relations with foreign central banks is always guided, so far as political questions are concerned, by the views of His Majesty's Government, he was not consulted by the Governor of the Bank of England before he agreed to the decision of the Bank for International Settlements that foreign assets of the Czecho-Slovakian Government should be transferred to Germany?

Mr. Arthur Henderson: asked the Chancellor of the Exchequer (1) whether he will give an assurance to the House that in future His Majesty's Government will expect to be informed by the British representatives on the Bank for International Settlements of any proposal to transfer to the aggressor the assets of the victim of aggression, in accordance with the established practice of consultation between the Treasury and the Bank of England;
(2) what action His Majesty's Government, as a signatory of the Protocol, proposes to take to prevent a repetition of the action of the Board of the Bank for International Settlements in handing over the assets of a Government which has been the victim of aggression to the aggressor?

Mr. Pethick-Lawrence: asked the Chancellor of the Exchequer whether, in view of the recent complete subordination of the Reichsbank to the German Government, he will reconsider his view that it would be improper for him to consult with the representatives of the Bank of England who sit on the Board of the Bank for International Settlements as to their line of policy on that body?

Sir J. Simon: The assets referred to are, I understand assets entrusted to the Bank for International Settlements by the National Bank of Ceczho-Slovakia. As I have already stated to the House, His Majesty's Government cannot accept responsibility for the actions of the Bank


for International Settlements and the British members of the Board of the Bank for International Settlements are not responsible to His Majesty's Government. They must act according to their judgment under the authority which they derive from the Statutes of the Bank for International Settlements which, in turn, are laid down by the International Convention of 1oth January, 1930. The British directors could not therefore be asked to accept responsibility to His Majesty's Government. The House will, I think, be agreed that His Majesty's Government ought not to disregard treaty obligations towards the Bank for International Settlements which have been solemnly entered into by this country in common with other countries.

Mr. Noel-Baker: Did not the Governor of the Bank of England in this case settle a question of foreign policy without consultation with the Treasury, and how can that accord with the principle which the Chancellor himself laid down, and which I have cited in the question?

Sir J. Simon: The Governor of the Bank, as I have explained more than once, acts because the constitution of this body, which was created by the Treaty of 1930, provides for his membership. That does not make him in the very least the spokesman of the British Government, and I still take the view that in political matters, and only in political matters, can the Treasury properly intervene.

Mr. Pethick-Lawrence: Can the right hon. Gentleman really maintain, in view of what is the case in other countries, which have representatives of their banks on the Bank for International Settlements, that in this country alone the representative of our central bank is not to be in touch with our Government on matters referring to the Bank for International Settlements?

Sir J. Simon: I think that if the right hon. Gentleman will refresh his memory on the articles in the Treaty, he will see the true position. The present Government are not responsible for this. This is an arrangement that was made by the Government of 1930, and they then entered into the solemn treaties which the present Government have got to observe.

Mr. Pethick-Lawrence: Does the right hon. Gentleman suggest that there is any-

thing in the Treaty which prohibits the Government from discussing these matters with the Bank of England?

Sir J. Simon: I think there is no doubt that, on a fair reading of the constitution, it is intended that the Bank for International Settlements should not be influenced by political considerations directed by any Government at all. I quite agree that a very anomalous position arises when, in the case of another Government, the head of their bank is also an official of the Government, but in the Treaty which the Government of 1930 made, and the articles of which they approved, there is this article:
No person shall be appointed or hold office as a director who is a member or an official of a Government or a member of a legislative body, unless he is the governor of a central bank.
I very much regret that there should be such a position.

Mr. A. Henderson: In view of the fact that His Majesty's Government were first informed of the proposal to transfer these assets by the French Ambassador, does not that indicate that the French Government were themselves informed by the French representatives on the board of the Bank for International Settlements, and does not that certainly indicate that the British representatives had a similar duty towards the British Government as the French representatives had towards their Government?

Sir J. Simon: I do not think so.

Sir William Davison: Is it not very desirable, in view of what the Chancellor has just said, that notice should be given with regard to the termination of this Treaty, or the alteration of its form, in view of the understood meaning of the Treaty being entirely altered by practice?

Mr. G. Strauss: asked the Chancellor of the Exchequer on what date His Majesty's Government were asked by the French Government to consider whether effective steps could be taken to prevent the transfer of the Czech gold held by the Bank for International Settlements to Germany?

Sir J. Simon: The date was 24th March.

Mr. Strauss: Is it not a fact that when the Government said previously that they heard of this matter only through an indirect Continental source, it was, in


fact, an official request of the French Ambassador in London to this Government to take some action?

Sir J. Simon: No, Sir. The hon. Gentleman may be referring to something I said earlier in the Debate. My statement was quite accurate. I was not referring to this communication. We had already heard it from an indirect source.

Mr. Boothby: May I ask what reply was made to the French Government?

Sir J. Simon: That is a question that has already been answered, as my hon. Friend will see from the Official Report. I think an hon. Member opposite put a question the other day.

Mr. Strauss: Is it not a fact that the right hon. Gentleman did have a request made to him a day later, on 25th March, from the French Ambassador?

Mr. Mander: asked the Chancellor of the Exchequer whether he will consider the advisability of proposing that a conference should be held of the States signatories to the International Convention, 20th January, 1930, setting up the Bank for International Settlements, Great Britain, France, Germany, Italy, Japan, Belgium, and Switzerland, with a view to an alteration of the organisation of the Bank shown to be advisable as the result of the recent transfer to Germany of assets the property of the former Czechoslovak State?

Sir J. Simon: I do not consider that the action suggested in the question would be at all likely to achieve the purpose which the hon. Member has in mind.

Mr. Mander: In view of the fact that the Chancellor has just stated that the Statutes of the Bank for International Settlements are no longer being observed because the German member is acting under the orders of his Government, does not the right hon. Gentleman think that some steps are necessary to alter the present situation?

Sir J. Simon: I must not be misunderstood. Whether one regrets it or whether one does not regret it, I did not say that the terms of the Statutes were not being observed. The States provided for the very representation of Germany which now exists on the board. I do not myself think that the calling together of the

States listed in the question would be likely to lead to unanimous agreement.

Mr. Mander: Is the Chancellor really satisfied with a position which leaves the Axis Powers in a majority and enables Germany to steal £6,000,000?

Sir J. Simon: I have said more than once what my own view is. I have never differed in the very least, but I think the hon. Gentleman will agree with me that if we find ourselves bound by a treaty, we must find some lawful way of getting out of it.

Sir Herbert Williams: May I ask my right hon. Friend whether a refusal on the part of the Bank of England to cash cheques would not result in a panic withdrawal of all foreign currency?

Mr. Noel-Baker: Can it be in accordance with the Statutes that the Bank for International Settlements should violate international law by handing over assets to which Germany had no legal claim, and will the Chancellor call a conference in order to put that right?

Sir J. Simon: I should be very glad to see any conference put anything right, but I do not think it is a very practical suggestion to take this list of States mentioned in the question and suggest that by calling a conference, it would put something right.

Mr. Mander: What are you going to do about it, then?

Sir Archibald Sinclair: What lawful action—to use the Chancellor's own words—is he going to take to put the matter right?

Sir J. Simon: I think this event is a very deplorable event. I have never for a moment hesitated to say so. It is also a very unusual event. The general usefulness of the bank in other connections is, I think, accepted by most authorities. I do not myself yet see what method could usefully be taken to put an end to the Bank for International Settlements.

Mr. Sandys: asked the Chancellor of the Exchequer what functions are at present performed by the Bank for International Settlements; whether these, in the opinion of the Government, justify its continued enjoyment of special privileges and immunities in this country; and, in view of the fact that these


privileges are being used to undermine the peace policy of His Majesty's Government, whether he will consider the advisability of denouncing the relevant treaty, or, alternatively, of establishing some more effective co-operation between the British Government and the Bank of England's representatives on the board?

Sir J. Simon: The functions of the Bank for International Settlements are set out in Article 3 of the Statutes. These functions follow the recommendations contained in the report of the committee of experts, dated June, 1929 (Command Paper 3343), which expressed the hope that the bank would become an increasingly close and valuable link in the co-operation of central banking institutions generally. The question whether the bank should continue to enjoy special immunities in this country is, I think, quite a separate one. Without accepting the comments contained in the question, I may say that I am advised that the existing immunities could not be brought to an end except by common agreement between all the Governments which are parties to the relevant international agreements. As regards co-operation with the British representatives on the board, I would refer to the replies given earlier to-day.

Mr. Sandys: Will my right hon. Friend, in view of what he said earlier about this deplorable event, make it clear to the governor of the bank that unless the British representatives in future exercise a greater sense of responsibility in the performance of their functions there will be a growing and insistent demand for the withdrawal of these special immunities and privileges?

Sir J. Simon: I think the many questions which have been put and answered in this House on the subject will go to show the view which is taken in the House on this matter.

Mr. Sandys: May we have an assurance that the Government themselves will make representations to the bank to that effect?

Sir J, Simon: I think a more important matter is that I should make it plain for my part, as I have done throughout, that I regret that this happened. I have done my best to discover whether there is any means by which I could change the constitution of the bank, but, obviously, there are very great difficulties about it.

Mr. Silverman: Will the right hon. Gentleman consider that one method of securing the control which he would like to have would be to nationalise the Bank of England so that the governor of the bank would then be an officer of the Government?

Mr. G. Strauss: asked the Chancellor of the Exchequer whether any discussions were held with, or representations made to the Bank of England directors on the Bank for International Settlements before 19th May, concerning the transfer of Czech assets to Germany?

Sir J. Simon: The Bank of England was informed of the oral communication from the French Government as to which I made a statement in reply to a question by the hon. Member last Thursday, and of the reply of His Majesty's Government to this communication.

Mr. Strauss: Is not the situation this, that the French Government asked the British Government whether they could do anything to stop this transfer and that the British Government made no representations to Mr. Montagu Norman or Sir Otto Neimeyer who proceeded to Basle to support the transfer of this gold?

Sir J. Simon: If the hon. Gentleman looks at the answer which I gave last Thursday, he will find that it shows the attitude of His Majesty's Government.

Mr. A. Henderson: Can the right hon. Gentleman say why it was that the French Government knew of the proposed transfer of the gold before the British representatives on the Bank for International Settlements?

Sir J. Simon: I cannot say.

MOTOR VEHICLE LICENCES.

Sir Robert Bird: asked the Chancellor of the Exchequer the annual cost of the collection of the horse-power tax upon all classes of motor vehicles to the Treasury and Post Office, the county and local authorities, and of the police inspection of motor licences, respectively?

Sir J. Simon: As the reply contains a number of figures I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

Following is the reply:

The expenses of the councils of counties, county boroughs and large burghs in Scotland incurred in connection with the licensing and registration of mechanically-propelled vehicles and the issue of drivers' licences is repayable out of the Exchequer. The sum provided for this purpose in the current year's Estimates (Class VI 18) is £690,000 including approximately £9,000 for the special inspections carried out quarterly by the police. No payment is made to the Post Office for expenses in connection with the renewal of motor vehicle licences, but it is estimated that the expenditure of that Department amounts to about £30,000. The cost of forms, etc., provided by the Stationery Office is estimated at £20,000. The total estimated expenditure is, therefore, £749,000 or 1.72 percent. of the estimated receipts.

LOCAL TAXATION.

Sir Stanley Reed: asked the Chancellor of the Exchequer whether, in view of the rise in the rates collected by local authorities from £78,971,000 in 1913–14 to £210,104,000 in 1938–39, the increase in local indebtedness, and the conflict as to how far this is due to the action of the local authorities and how far to duties laid upon them by Parliament and Ministers, he will consider the appointment of a small expert committee to inquire into local taxation?

Sir J. Simon: While I view with concern the constant increase in local taxation, I doubt if any useful purpose would be served by the appointment of an expert committee to inquire into the matter.

Sir S. Reed: May I respectfully ask, in view of the very grave statement by the Prime Minister that this country is rapidly approaching the limits of its taxable capacity, whether the question of growing rates and growing burdens is not one of immense national importance?

Sir J. Simon: It is certainly a matter of importance but, on the other hand to a large extent the matter of rates is the responsibility of the selected representatives of the ratepayers on local authorities.

Sir H. Williams: Is it not the case that during the same period Parliamentary grants to local authorities have increased

seven times, and when local authorities complain that increasing burdens are put upon them owing to Parliamentary action, will he not inquire into that?

Mr. Leach: Does not the right hon. Gentleman realise that the money spent by local authorities is the finest investment that this country now makes?

Mr. James Griffiths: May I ask the right hon. Gentleman to reconsider this matter?

CHINESE CURRENCY.

Mr. Bellenger: asked the Chancellor of the Exchequer what has been the percentage depreciation in the exchange value of the Chinese dollar since the passing of the China (Currency Stabilisation) Act; and whether he is satisfied that the stabilisation fund is adequate to maintain the Chinese currency at its present level?

Mr. Pethick-Lawrence: asked the Chancellor of the Exchequer whether he has any statement to make with regard to the position of the Chinese dollar?

Sir J. Simon: The percentage depreciation in the exchange value of the Chinese dollar since the passing of the China (Currency Stabilisation) Act is about 20 per cent. With regard to the position of the Chinese dollar, there is nothing which I can add at present to the statement issued in Hong Kong which was circulated in the Official Report on 13th June.

Mr. Bellenger: In view of the intentions of His Majesty's Government, as explained by the Chancellor when the Act was going through the House, is it the purpose of His Majesty's Government to defend the Chinese dollar from the attacks that are now being made by the Japanese Government?

Sir J. Simon: As the hon. Gentleman knows, the purpose of the Act, as explained in the Debate, was to give assistance, under the terms of the Act, to maintain the Chinese currency. We guaranteed a certain contribution made to the fund.

WAR RISKS (COMPENSATION AND INSURANCE).

Mr. Cocks: asked the Chancellor of the Exchequer whether he is now in a


position to publish the details of the various Government schemes announced on 31st January, for, in the event of war, giving compensation in respect of civilian casualties, giving compensation to damaged property on land, arranging for the emergency reconstruction of such property, and insuring essential stocks; and when will the necessary legislation be introduced?

Sir J. Simon: The compensation to be paid in respect of civilian casualties and the arrangements to be made for the emergency reconstruction of essential property will be the subjects of legislation to be introduced if and when an emergency arises, and it is not proposed to publish further details in the meantime. As regards damage to private property on land, other than essential commodities, I indicated in my statement of 31st January that compensation would be payable at the end of the emergency. While the administrative arrangements for assessing the damage are now in preparation, legislation will not be necessary until the time for any payments arrives. The insurance of stocks of essential commodities will be the subject of legislation which my right hon. Friend the President of the Board of Trade hopes to introduce in the near future, but, as he indicated in his reply to my hon. and gallant Friend the Member for the Handsworth Division of Birmingham (Commander Locker-Lamp-son) on 5th June, he is not yet in a position to name a date.

Mr. Cocks: With regard to the question of damage to property, is the Chancellor of the Exchequer aware that a good deal of uncertainty prevails on this matter, and will not the Government state in rather more detail what they propose to do about it?

Sir J. Simon: I think the statement which has been made is quite clear and easy to understand, but I recognise, as the hon. Gentleman has said, that a number of people would very much like it if we were able to go further and do more.

MUNICIPAL BILLS.

Mr. Bellenger: asked the Chancellor of the Exchequer whether he is aware that the statutory provisions under which the Metropolitan Water Board are authorised to borrow money by way of bills are being

impeded by the policy of the Bank of England in refusing to discount such bills for more than six months with a period of 90 days clearance between the maturity of such bills; and whether this policy has been approved by him as part of the restriction of the circulation of municipal bills?

Sir J. Simon: I assume that the hon. Member refers to the decision of the Bank of England that they will not consider eligible for rediscount bills of local authorities and public bodies issued with a currency of more than six months, and that during each financial year there must be at least 60 days, to be reckoned consecutively or in two periods of not less than 30 consecutive days, during which the authority or public body concerned has no bills outstanding. The circulation of bills issued by the Metropolitan Water Board is subject to these conditions, which are part of the measures of market regulation which, as I informed my hon. Friend the Member for East Aberdeen (Mr. Boothby) on 13th June, have my sympathy and approval.

Mr. Bellenger: Does the right hon. Gentleman realise that these restrictions placed on local authorities and public undertakings by the Bank of England are resulting in higher borrowing costs to these authorities when they go into the market; and is that the Chancellor's intention?

Sir J. Simon: No, Sir. I want each of these authorities to get reasonable facilities, but it is necessary to put certain limits. By that means we secure liquidity of the market and that, of course, is the direct concern of both the clearing banks and the Bank of England.

NOTE CIRCULATION.

Mr. Moreing: asked the Chancellor of the Exchequer whether there was an increase in the note circulation of £14,854,850 compared with last year published in the Bank of England Return of 31st May?

Sir J. Simon: The figure given by my hon. Friend is that of the increase in the notes in circulation on 31st May, 1939, as compared with 1st June, 1938. He will, of course, be aware that this year Whit Monday fell on 29th May. In view of the question by my hon. Friend on


6th June, I had perhaps better point out that there is a distinction between note circulation and note issue.

Mr. Moreing: If the right hon. Gentleman will take the notes in the Banking Department and the notes in circulation and add them together he will find that the total note issue has not been increased but it is a fact that the notes in circulation have increased, in number, I think altogether by some 140,000,000 since 1931 and therefore, I think his statement that my question of 6th June, was not founded on facts is unfair.

BUSINESS OF THE HOUSE.

Mr. Arthur Greenwood: Can the Prime Minister say what business he proposes to take to-day and has he any statement to make about Thursday's proceedings?

The Prime Minister (Mr. Chamberlain): In regard to the business to-day, after the Motion relating to the National Memorial to His late Majesty King George the Fifth, we desire to complete the Committee stage of the Ministry of Supply Bill. Then we shall proceed with the Import Duties Orders, the Processed Milk Order and the Financial Resolution (Expenses of the Board of Education). If there is time, we hope to obtain the Second Reading of the Mining Industry (Amendment) Bill and of the Post Office and Telegraph (Money) Bill, together with the relative Money Resolutions. We must conclude the Committee stage of the Ministry of Supply Bill to-day, and we hope to make progress with other business without asking the House to sit late.
In reply to the second part of the question, I would like to make this statement to the House. Their Majesties the King and Queen return from their tour in Canada and the United States of America on Thursday. I desire to inform the House that at the beginning of business on that day I shall move a Motion for an Address to His Majesty.
I am sure it will be the wish of hon. Members to have the opportunity of taking part in the welcome to the King and Queen on their way to Buckingham Palace and, accordingly, I am consulting Mr. Speaker with regard to making the necessary arrangements for a temporary

suspension of the sitting on Thursday evening. Members; will assemble on the pavements adjoining New Palace Yard and on the opposite side of the roadway. I will announce later the precise time of the suspension, which will probably be at 5.15 p.m., and we shall resume our business at 6 o'clock.

Mr. Benn: Is the Prime Minister aware that there is on the Paper for to-morrow a Motion to approve Orders-in-Council under the Military Training Act and the Reserve and Auxiliary Forces Act? In view of the fact that both these Orders are extremely complicated, one having 32 Clauses and two Schedules, and the other 22 Clauses and two Schedules, would the right hon. Gentleman not consider remitting these Orders in the first instance to a Select Committee as was done in another place yesterday, in order that the House may have some guidance? The subject matter of the Orders is not susceptible of being dealt with by a single answer "Yes" or "No," without examination.

Mr. Boothby: There is some doubt about whether these Orders come under the Military Training Act or not, and whether they are, properly speaking, matters consequent upon that Act. Discussion will probably be raised on that point, and I would rather like to support the contention of the right hon. Gentleman opposite that, in view of the complexity of the Orders and the constitutional issues involved, they should be sent, in the first instance, to a Select Committee.

The Prime Minister: I do not think we can compare the procedure in this House with the procedure in another place, which is quite different. With regard to the suggestion of the right hon. Gentleman, I have not had notice of it and I should like time to consider it.

Mr. Benn: I am much obliged to the Prime Minister, but he will be aware that in a Debate in which only one question is put and only one speech is allowed to each Member, it is very difficult to go into all the questions of detail involved, whereas under the arrangement in another place, members of the Government and officials of the Departments concerned appeared before their Lordships and explained the details.

Mr. Sandys: With regard to the reference to an Address of Welcome to Their Majesties, may I ask whether it is proposed to present that Address to Their Majesties when they pass on Thursday?

The Prime Minister: No, Sir.

Motion made, and Question put,
That the Proceedings on Government Business be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)."—[The Prime Minister.]

The House divided: Ayes, 262; Noes, 142.

Division No. 183.]
AYES.
[3.51 p.m.


Acland-Troyte, Lt.-Col. G. J.
Ellis, Sir G.
Loftus, P. C.


Adams, S. V. T. (Leeds, W.)
Elliston, Capt. G. S.
MacAndrew, Colonel Sir C. G.


Albery, Sir Irving
Emrys-Evans, P. V.
Macdonald, Capt. P. (Isle of Wight)


Allen, Col. J. Sandeman (B'knhead)
Entwistle, Sir C. F.
McEwen, Capt. J. H. F.


Allen, Lt.-Col. Sir W. J. (Armagh)
Errington, E.
McKie, J. H.


Apsley, Lord
Evans, Capt. A. (Cardiff, S.)
Macnamara, Lieut.-Colonel J. R. J.


Assheton, R.
Everard, Sir William Lindsay
Macquisten, F. A.


Baillie, Sir A. W. M.
Fildes, Sir H.
Magnay, T.


Baldwin-Webb, Col. J.
Findlay, Sir E.
Maitland, Sir Adam


Barrie, Sir C. C.
Fleming, E. L.
Makins, Brigadier-General Sir Ernest


Baxter, A. Beverley
Fox, Sir G. W. G.
Margesson, Capt. Rt. Hon. H, D. Ft.


Beamish, Rear-Admiral T. P. H.
Gilmour, Lt.-Col. Rt. Hon. Sir J.
Markham, S. F.


Beauchamp, Sir B. C.
Gledhill, G.
Marsden, Commander A.


Beaumont, Hon. R. E. B. (Portsm'h)
Gluckstein, L. H.
Mason, Lt.-Col. Hon. G. K. M.


Bennett, Sir E. N.
Glyn, Major Sir R. G. C.
Maxwell, Hon. S. A.


Bernays, R. H.
Goldie, N. B.
Medlicott, F.


Bird, Sir R. B.
Grant-Ferris, Flight-Lieutenant ft.
Mellor, Sir R. J. (Mitcham)


Blair, Sir R.
Grattan- Doyle, Sir N.
Mellor, Sir j. S. P. (Tamworth)


Boothby, R. J. G.
Gretton, Col. Rt. Hon. J.
Mills, Sir F. (Leyton. E.)


Bossom, A.C.
Gridley, Sir A. B.
Mills, Major J. D. (New Forest)


Boulton, W. W.
Grimston, R. V.
Mitchell, Sir W. Lane (Streatham)


Bower, Comdr. R. T.
Guinness, T. L. E. B.
Moore, Lieut.-Colonel Sir T. C. R.


Boyce, H. Leslie
Gunston, Capt. Sir D. W
Moore-Brabazon, Lt, Col. J. T.C.


Brass, Sir W.
Hacking, Rt. Hon. Sir D. H.
Moreing, A. C.


Briscoe, Capt. R. G.
Hambre, A. V.
Morgan, R. H. (Worcester, Stourbridge


Broadbridge, Sir G. T.
Hammersley, S. S.
Morris, O. T. (Cardiff, E.)


Brooke, H. (Lewisham, W.)
Hannah, I. C.
Morris Jones, Sir Henry


Brown, Brig.-Gen. H. C. (Newbury)
Hannon, Sir P. J. H
Morrison, G. A. (Scottish Univ's.)


Browne, A. C. (Belfast, W.)
Harvey, T. E. (Eng. Univ's.)
Morrison, Rt. Hon. W. S. (Cirencester)


Bull, B. B.
Haslam, Henry (Horncastle)
Munro, P.


Bullock, Capt. M.
Heilgers, Captain F. F. A.
Neven-Spence, Major B. H. H.


Burgin, Rt. Hon. E. L.
Hely-Hutchinson, M. R.
Nicolson, Hon. H. G.


Butcher, H. W.
Heneage, Lieul.-Colonel A. P
O'Neill, Rt. Hon. Sir Hugh


Cartland, J. R. H.
Hepburn, P. G. T. Buchan
Orr-Ewing, I. L.


Carver, Major W. H.
Hepworth, J.
Palmer, G. E. H.


Cayzer, Sir C. W. (City of Chester)
Herbert, Lt.-Col. J. A. (Monmouth)
Peake, O.


Cazalet, Capt. V. A. (Chippenham)
Higgs, W. F.
Peat, C. U.


Chamberlain, Rt. Hn. N. (Edgb't'n)
Hoare, Rt. Hon. Sir S.
Perkins, W. R. D.


Channon, H.
Holdsworth, H.
Peters, Dr. S. J.


Chapman, Sir S. (Edinburgh, S.)
Holmes, J. S.
Pickthorn, K. W. M.


Clarke, Colonel R. S. (E. Grinstead)
Hopkinson, A.
Pilkington, R.


Colman, N. C. D.
Hore-Belisha, Rt. Hon.
Pownall, Lt.-Col. Sir Assheton


Cook, Sir T. R. A. M. (Norfolk, N.)
Horsbrugh, Florence
Radford, E. A.


Cooke, J. D. (Hammersmith, S.)
Hudson, Rt. Hon. R. S. (Southport)
Ramsay, Captain A. H. M.


Cooper, Rt. Hn. A. Duff (W'st'rS.G'gs)
Hulbert, Squadron-Leader N. J.
Ramsbotham, Rt. Hon. H.


Cooper, Rt. Hon. T. M. (E'burgh, W.)
Hunloke, H. P.
Rankin, Sir R.


Courthope, Col. Rt. Hon. Sir G. L.
Hunter, T.
Rathbone, J. R. (Bodmin)


Cox, H. B. Trevor
Hurd, Sir P. A.
Rawson, Sir Cooper


Croft, Brig.-Gen. Sir H. Page
Hutchinson, G. C.
Reed, A. C. (Exeter)


Crooke, Sir J. Smedley
Inskip, Rt Hon. Sir T. W. H.
Reed, Sir H. S. (Aylesbury)


Crookshank, Capt. Rt. Hon. H. F. C.
James, Wing-Commander A. W. H.
Reid, J. S. C. (Hillhead)


Cross, R. H.
Jarvis, Sir J. J.
Remer, J. R.


Cruddas, Col. B.
Jennings, R.
Rickards, G. W. (Skipton)


Culverwell, C. T.
Joel, D. J. B.
Robinson, J. R. (Blackpool)


Davidson, Viscountess
Jones, L. (Swansea W.)
Rosbotham, Sir T.


Davison, Sir W. H.
Kerr, Colonel C. I. (Montrose)
Ross Taylor, W. (Woodbridge)


De Chair, S. S.
Kerr, Sir J. Graham (Scottish Univ.)
Rowlands, G.


De la Ben, R.
Knox, Major-General Sir A. W. F.
Royds, Admiral Sir P. M. R.


Denman, Hon. R. D.
Lamb, Sir J. Q.
Ruggles-Brise, Colonel Sir E. A.


Denville, Alfred
Lambert, Rt. Hon. G.
Russell, Sir Alexander


Doland, G. F.
Lancaster, Captain C. G.
Russell, S. H. M. (Darwen)


Donner, P. W.
Leech, Sir J. W.
Salmon, Sir I.


Drewe, C.
Leighton, Major B. E. P.
Salter, Sir J. Arthur (Oxford U.)


Dugdale, Captain T. L.
Levy, T.
Samuel, M. R. A.


Duggan, H. J.
Lewis, O.
Sandeman, Sir N. S


Duncan, J. A. L.
Liddall, W. S.
Sanderson, Sir F. B


Dunglass, Lord
Lipson, D. L.
Sandys, E. D.


Eastwood, J. F.
Little, J.
Schuster, Sir G. E.


Eckersley, P. T.
Llewellin, Colonel J. J.
Scott, Lord William


Edmondson, Major Sir J.
Lloyd, G. W.
Shaw, Captain W. T. (Forfar)


Elliot, Rt. Hon. W. E.
Locker-Lampion, Comdr. O. S.
Shepperson, Sir E. W.




Simmonds, O. E.
Sueter, Rear-Admiral Sir M. F.
Warrender, Sir V.


Simon, Rt. Hon. Sir J. A.
Suteliffe, H.
Watt, Lt.-Col. G. S. Harvie


Smiles, Lieut.-Colonel Sir W. D.
Tate, Mavis C.
Wedderburn, H. J. S.


Smith, Bracewell (Dulwich)
Taylor, C. S. (Eastbourne)
Wells, sir Sydney


Smith, Sir R. W. (Aberdeen)
Thomas, J. P. L.
Whiteley, Major J. p. (Buckingham)


Smithers, Sir W.
Thorneycroft, G. E. P.
Wickham, Lt.-Col. E. T. R.


Somervell, Rt. Hon. Sir Donald
Thornton-Kemsley, C. N.
Williams, C. (Torquay)


Somerville, Sir A. A. (Windsor)
Touche, G. C.
Williams, Sir H. G. (Croydon, S.)


Southby, Commander Sir A. R. J.
Train, Sir a.
Wise, A, R.


Spears, Brigadier-General E. L.
Tree, A. R. L. F.
Womersley, Sir W. J.


Stanley, Rt. Hon. Oliver (W'm'l'd)
Tryon, Major Rt. Hon. G. C.
Wright, Wing-commander J. A. C.


Stewart, J. Henderson (Fife, E.)
Tufnell, Lieut.-Commander R, L.
York, C.


Storey, S.
Turton, R. H.
Young, A. S. L. (Partick)


Stourton, Major Hon. J. J.
Wakefield, W. W.



Strauss, H. G. (Norwich)
Wallace, Capt. Rt. Hon. Euan
TELLERS FOR THE AYES.—


Strickland, Captain W. F.
Ward, Lieut.-Col. Sir A. L. (Hull)
Captain Waterhouse and Mr. Furness.


Stuart, Lord C. Crichton- (N'thw'h)
Ward, Irene M. B. (Wallsend)


Stuart, Rt. Hon. J. (Moray and Nairn)
Wardlaw-Milne, Sir J. S.




NOES


Acland, Sir R. T. D.
Griffiths, G. A. (Hemsworth)
Parker, J.


Adams, D. (Consett)
Griffiths, J. (Llanelly)
Parkinson, J. A.


Adams, D. M. (Poplar, S.)
Groves, T. E.
Pethick-Lawrence, Rt. Hon. F. W.


Adamson, Jennie L.(Dartford)
Hall. G. H. (Aberdare)
Pools, C. C,


Alexander, Rt. Hon. A. V. (H'lsbr.)
Hall, J. H. (Whitechapel)
Price, M P.


Ammon C. G.
Hardie, Agnes
Richards, R. (wrexham)


Anderson, F. (Whitehaven)
Harris, Sir P. A.
Ridley. G


Barnes, A. J.
Hayday, A.
Ritson, J.


Barr, J.
Henderson, A. (Kingswinford)
Roberts, W. (Cumberland, N.)


Batey, J.
Henderson, J. (Ardwick)
Robinson, W. A. (St. Helens)


Beaumont, H. (Batley)
Henderson, T. (Tradeston)
Rothschild, J. A. de


Bellenger, F. J.
Hills, A, (Pontefract)
Sanders, W. S.


Benn, Rt. Hon. W. W.
Hopkin, D.
Sexton, T. M.


Benson, G.
Jagger, J.
Shinwell, E.


Bromfield, W.
Jenkins, A. (Pontypool)
Silkin, L.


Brown, C. (Mansfield)
Jenkins, Sir W. (Neath)
Silverman, S. S.


Buchanan, G.
John, W.
Sinclair, Rt. Hon. Sir A. (C'thn's)


Burke, W. A.
Johnston, Rt. Hon. T.
Sloan, A.


Cape, T.
Jones, A. C. (Shipley)
Smith, Ben (Rotherhithe)


Charleton, H. C.
Jones, Sir H. Hayan (Merioneth)
Smith, E. (Stoke)


Cluse, W. S.
Kennedy, Rt. Hon. T.
Smith, Rt. Hon. H. B. Lees- (K'ly)


Cooks, F. S.
Kirby, B. V.
Smith, T. (Normanton)


Collindridge, F.
Kirkwood, D.
Sorensen, R. W.


Cove, W. G.
Lansbury, Rt. Hon. G.
Stephen, C.


Daggar, G.
Lathan, G.
Stewart, W. J. (H'ght'n-le-Sp'ng)


Dalton, H.
Lawson, J. J,
Stokes, R. R.


Davidson, J. J. (Maryhill)
Leach, W.
Strauss, G. R. (Lambeth, N.)


Davies, S. O. (Merthyr)
Lee, F.
Taylor, R. J. (Morpeth)


Day, H.
Leonard, W.
Thorne, W.


Dobbie, W.
Leslie, J. R.
Thurtle, E.


Dunn, E. (Rother Valley)
Lagan, D. G.
Tinker, J. J.


Ede, J. C.
Lunn, W.
Viant, S. P.


Edwards, A. (Middlesbrough E.)
Macdonald, G. (Ince)
Walker, J.


Edwards, Sir C. (Bedwellty)
McEntee, V. La T.
Watkins, F. C.


Evans, D. O. (Cardigan)
McGhee, H. G.
Watson, W. McL.


Evans, E. (Univ. Of Wales)
McGovern, J.
Welsh, J. C.


Fletcher, Lt.-Comdr. R. T. H.
MacLaren, A.
Westwood, J.


Frankel, D.
Maclean, N.
White, H. Graham


Gallacher, W.
Mander, G. la M.
Whiteley, W. (Blaydon)


Gardner, B. W.
Marshall, F.
Wilkinson, Ellen


Garro Jones, G. M.
Maxton, J.
Williams, E. J. (Ogmore)


George, Major G. Lloyd (Pembroke)
Messer, F.
Williams, T. (Don Valley)


George, Megan Lloyd (Anglesey)
Montague, F.
Wilson, C. H. (Attercliffe)


Gibbins, J.
Morrison, Rt. Hon. H. (Hackney, S.)
Windsor, W. (Hull, C.)


Green, W. H. (Deptford)
Morrison, R. C. (Tottenham, N.)
Woods, G. S. (Finsbury)


Greenwood, Rt. Hon. A.
Naylor, T. E.
Young, Sir R. (Newton)


Grenfell, D. R.
Noel-Baker, P. J.



Griffith, F. Kingsley (M'ddl'sbro, W.)
Paling, W.
TELLERS FOR THE NOES.—




Mr. Mathers and Mr. Adamson.


Question put, and agreed to.

BILL PRESENTED.

SHOPS (SUNDAY TRADING RESTRICTION)ACT (1936) Amendment Bill,

"to amend the Shops (Sunday Trading Restriction) Act, 1936, in respect of holiday resorts," presented by Mr. Haslam; supported by Mr. Roland Robinson, Major Braithwaite, Mr. Channon, Mr. Loftus, Sir Arthur Harbord, Mr. Holmes,

Mr. Ross Taylor, Mr. C. S. Taylor, and Mr. Liddall; to be read a Second time To-morrow, and to be printed. [Bill 162.]

PATENTS AND DESIGNS (LIMITS OF TIME) BILL [Lords].

Reported, with Amendments, from Standing Committee C.

Bill, as amended (in the Standing Committee), to be considered upon Thursday, and to be printed. [Bill 161.]

Minutes of Proceedings to be printed. [No. 136.]

AIR MINISTRY (HESTON AND KENLEY AERODROMES EXTENSION) BILL.

Ordered, That the Select Committee on the Air Ministry (Heston and Kenley Aerodromes Extension) Bill have power to report from day to day the Minutes of the Evidence taken before them.—[Mr. James Stuart.]

BREAKING-UP OF STREETS BY STATUTORY UNDERTAKERS

Report from the Joint Committee, with Minutes of Evidence and Appendices, brought up, and read.

Report to lie upon the Table, and to be printed. [No. 134.]

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE A.

Colonel Gretton reported from the Committee of Selection; That they had added the following Fifteen Members to Standing Committee A (in respect of the Prevention of Damage by Rabbits Bill [Lords ]): Mr. Christie, Mr. Collindridge, Sir Thomas Cook, Mr. Clement Davies, Mr. De Chair, Colonel Sir Reginald Dorman-Smith, Mr. Edwards, Captain Heilgers, Mr. Hollins, Major Mills, Major Owen, Mr. Ramsbotham, Colonel Ropner, Sir Ernest Shepperson, and Mr. R. J. Taylor.

STANDING COMMITTEE C.

Colonel Gretton further reported from the Committee; That they had discharged the following Member from Standing Committee C: Major Despencer-Robert-son; and had appointed in substitution: Mr. York.

STANDING COMMITTEE D.

Colonel Gretton further reported from the Committee; That they had discharged the following Member from Standing Committee D: Mr. Cooke; and had appointed in substitution: Captain Shaw.

STANDING COMMITTEE D.

Colonel Gretton further reported from the Committee; That they had added the following Twenty-five Members to Standing Committee D (in respect of the Agricultural Development Bill): Sir Richard Acland, Lieut.-Colonel Acland-Troyte, Mr. Alexander, Mr. Anstruther-Gray, the Attorney-General, Major Braithwaite, Mr. Charles Brown, Brigadier-General Clifton Brown, Mr. Colville, Colonel Sir Reginald Dorman-Smith, Mr. Drewe, Captain Dugdale, Sir Joseph Lamb, Mr. John Morgan, Mr. Palmer, Mr. Price, Captain Ramsay, Sir Edward Ruggles-Brise, Mr. T. Smith, Mr. Snadden, Mr. Henderson Stewart, Mr. Thornton-Kemsley, Mr. Watson, Mr. T. Williams, and Sir Walter Womersley.

Reports to lie upon the Table.

MESSAGE FROM THE LORDS.

That they have agreed to,—

London County Council (Money) Bill,

Southern Railway Bill, without Amendment.

That they have passed a Bill, intituled, "An Act to make further provision with respect to the transfer of lands to the National Trust for Places of Historic Interest or Natural Beauty and for other purposes."[National Trust for Places of Historic Interest or Natural Beauty Bill [Lords].

Also a Bill, intituled, "An Act to extend the time for compulsory purchase of lands authorised by the Barmouth Urban District Council Act, 1929; and for other purposes." [Barmouth Urban District Council Bill [Lords].

And also a Bill, intituled, "An Act to enable the Mayor Aldermen and Burgesses of the Borough of Macclesfield to construct further waterworks; to reduce the amount of compensation water which they are required to discharge into the River Bollin; to confirm an agreement for the purchase of the undertakings of the Electricity Company of Macclesfield Limited; to make further provision with regard to streets buildings sewers and drains and the health and good government of the borough; and for other purposes." [Macclesfield Corporation Bill [Lords].

Water Undertakings Bill [Lords],— That they have appointed a Committee consisting of Seven Lords to join with a Committee of the Commons to consider the Water Undertakings Bill [Lords], and request the Commons to appoint an equal number of their members to be joined with the said Lords.

NATIONAL TRUST FOR PLACES OF HISTORIC INTEREST OR NATURAL BEAUTY BILL [LORDS].

BARMOUTH URBAN DISTRICT COUNCIL BILL [Lords].

MACCLESFIELD CORPORATION BILL [Lords].

Read the First time; and referred to the Examiners of Petitions for Private Bills.

ELECTRICITY SUPPLY (METER CHARGES).

Mr. De la Bère: I beg to move,
That leave be given to bring in a Bill to limit the charges which may be made by electricity undertakings in respect of the hire of electricity meters, to amend the Electricity Supply Acts, 1882 to 1936; and for purposes connected therewith.
The Bill seeks to remove a disability and a source of irritation and expense. It has long been a practice of electricity undertakers in this country to make a charge for the rental of the meters by which the electricity they supply is measured, and this charge has inflicted considerable hardship for a number of years on many of the less prosperous of the consumers of electricity. The Bill is designed to spur those undertakers who are lagging behind in the matter of abolishing these charges. Many of the undertakings in this country have already either lessened the charge made for meter rents or done away with them altogether, but there are many less enlightened ones who have not done so. Very little attention has been paid by the legislator to meter rents, though the Meter Bill of 1936 ensured the examination and verification of meters for the protection of consumers. In 1930 the Electricity Commission appointed a committee to consider the uniformity of electricity charges and tariffs, and they reported as follows:
The committee are also of the opinion that it is not unreasonable for supply authorities to recoup themselves for the hire of meters by charging consumers who are on flat rates appropriate quarterly meter rentals; it is expedient, however, in the case of consumers who have adopted the optional multi-part

tariff that meter rentals should not be charged as a separate item, but should be included in the fixed charge portion of the tariff.
It would have been better if that committee, instead of consisting of half a dozen representatives of the supply interests had included at least one representative of the consumers. It is one of the most remarkable facts that there was no one on the committee to represent the interests of the consumers, and those who represented the interests of the supply companies were enabled to put their case forward without any opposition. As it is, their conclusion seems to be somewhat paradoxical, because they suggest that supply authorities are justified in charging for meters where the consumers are on the flat rates, but that the meter rent should not be charged as a separate item where the consumer is on a multi-part tariff. This is paradoxical, because the flat rate is the most expensive, and surely if they admit that it is possible to include the charge in the multi-part tariff it is also possible to include it in the flat rate. I suggest that meter rents are entirely wrong and not in accord with the usual practice of business. The grocer and the butcher do not charge for the scales with which they weigh out their goods; the retail distributor does not charge for the carriage of goods to the customer. Such charges are regarded as "overheads," and so I suggest they should be regarded in the electricity supply industry. As a matter of fact the incidence of meter rents works out very unfairly in many cases, and there are often considerable hardships imposed upon consumers of limited means. Meter rents may be a small matter with the large consumer, but they loom very largely in the account of the small consumer.
Let us examine the facts. A good English meter costs approximately 30s. installed. The supplier charges a rent which is usually 2s. 6d. a quarter, but sometimes more, so that the capital cost of the meter is wiped out in three years and frequently in considerably less time. One would imagine that, having acquired the whole cost of the meter, the suppliers would be content, but in fact many of them continue to charge, so that the meter very frequently is paid for over and over again. This matter is more flagrant and more serious than one might imagine. Let me give the House one instance. A woman, resident in London, paid altogether over £20 for the rent of


her meter. Then she objected to the supply company and told them that the meter must have been paid for at least 10 times over, and they informed her that if she declined to continue the rent payment they would discontinue her supply of current. She is still paying it, and must continue to do so indefinitely. That is not in accordance with our ideas of fair play in this country. If we look into the accounts of the supply undertakings we see that, apart from the "revenue from supply of current" there is an item "revenue from meter rents and other charges." This item is often considerable, though how much of it appertains to meters it is impossible to say.
I have already said that meter rents press most heavily on the less fortunate members of the community. Few of them have any idea whatever as to what they are paying in respect of the rental of the meters. They are not given a definite sum per quarter to pay, as is the consumer who rents a quarterly meter. This Bill has only three Clauses. It is on the main Clause that I have given this explanation. I submit that every consumer has a right to know exactly what he is paying and that the poorer consumer should not be penalised by higher charges, which in practice he is compelled to pay in advance. The way out of all this difficulty is to legislate for the removal of the meter rent as being quite out of keeping with the ordinary practice of business. For these reasons I ask leave to introduce the Bill, which will be welcomed by thousands of consumers throughout the country.

Bill ordered to be brought in by Mr. De la Bère, Mr. Rickards, Mr. Rathbone, Captain Peter Macdonald, Mr. MacLaren, Sir Smedley Crooke, Mr. Wilfrid Roberts, and Mr. Lyons.

ELECTRICITY SUPPLY (METER CHARGES) BILL,

"to limit the charges which may be made by electricity undertakings in respect of the hire of electricity meters, to amend the Electricity Supply Acts, 1882 to 1936; and for purposes connected therewith," presented accordingly, and read the First time; to be read a Second time to-morrow, and to be printed. [Bill 163.]

NATIONAL MEMORIAL TO HIS LATE MAJESTY KING GEORGE THE FIFTH.

Orders of the Day — MINISTRY OF SUPPLY BILL.

Considered in Committee [Progress, 19th June].

[COLONEL CLIFTON BROWN in the Chair.]

CLAUSE 7—(Power to require delivery of supplies and carrying out of works.)

4.21 p.m.

Mr. A. V. Alexander: I beg to move, in page 7, line 22, to leave out "or any other person."
The Minister will, of course, know the purpose of this Clause, and so does every other hon. Member. He will observe that in Sub-section (1) a reference is made to "the Minister or another Government Department." I do not think that I or my hon. Friends have the slightest objection to the general principles of the Clause or to the fact that instructions may be given or requests may be made by the Minister or by a Government Department, but when we come to the words "or any other person," we begin to wonder what is meant by them. Who are the people whom the draftsman had in mind when he inserted those words in the Bill? I can see no possible reason for the empowerment of any one but the Minister, or such Government officer as may be performing the duties on behalf of the Minister or a Government Department, to undertake these functions. I cannot see any reason for the words of which I complain. Unless we get a satisfactory explanation of those words, I shall ask my hon. Friends to see what they can do in the Division Lobby.

4.24 p.m.

The Minister without Portfolio (Mr. Burgin): There must be some misunderstanding here. The words are put in, of course, to include a contractor asking a sub-contractor. By far the largest field of supply is spread, broadly speaking, through sub-contractors. The Minister does not have direct control of subcontractors. He gives notice to the main contractor and it must be this contractor who gives the notice to the others. The words are completely innocuous. They mean that the contractor may give information and direction to a sub-contractor. They are of the essence of the Clause, and without them it would be stripped of the greater part of its value.

4.25 p.m.

Mr. Silver man: I think everyone can understand that in a system where there is such a network of sub-contracting there must be power to hand on directions, but why is it necessary to have words as wide as these, which would include almost everybody? Would it not be possible to limit them in some way?

Mr. Burgin: I hope not. It is quite impossible to define who may be, or in future may desire to be, a sub-contractor.

Mr. Silverman: I gather that the right hon. Gentleman is proposing to allow anybody at all, with no authority other than that given by the Clause, people with no contracts themselves and no interest of any kind, to come along and give directions and to require somebody else to enter into a contract. I am certain that that will never happen, but I am pointing out that the words are wide enough to enable it to happen. I suggest that it would have been possible to allow the Minister himself or the Department to give these directions. If the contractor required it and could not win consent voluntarily, and it was necessary for him to have these wide powers, all he would have needed was to go to the Minister and say: "In order to enable me to get on with my job I require such and such a contract," and if the Minister or the Department thought he did, they would require the proper person to enter into that contract. There is not the slightest need to use wide words of this kind which might conceivably go far beyond the scope intended by the Minister. Surely it is not past the ingenuity of the right hon. Gentleman or those who are working with him to devise some form of words suitable to carry out the purpose which he requires, without the dangers which these words obviously have.

Mr. Lewis: What is the objection to inserting after the word "person," the words "authorised by the Minister"? The passage would then read:
The Minister may give directions to any person who by virtue of any contract, whether made with the Minister or another Government Department or any other person authorised by the Minister.…
It would mean that the contractor who desired to give these instructions to a subcontractor would get authority from the Minister to do so. Has; my right hon. Friend any objection to that course?

4.28 p.m.

Mr. Burgin: I do not know offhand whether the words would have any limiting effect, but I cannot conceive that under any sensible administration, with such words as "fair and reasonable," which appear a few lines further down, anybody would enter into a contract which appeared to the Minister not to be fair and reasonable. On any of the powers in this Clause difficulties may arise. I am most anxious not readily to assent to wording which may take away the tremendous power that I desire with regard to sub-contractors. I do not want to limit the contractor who is called upon to do national work in his choice of subcontracting, either in whole or in part. Therefore, there must be power for the main contractor to call for the main subcontractors, and right on, down the line. The words "authorised by the Minister "would apply only to the first rung of the ladder, and further down the line you would have the sub-contractor talking to sub-sub-contractors; these may be persons whom the Minister does not know. I do not want to detain the Committee over this sort of case, but the idea that all subcontractors must come within the Clause is fundamental. The words used to express it are relatively immaterial, and I would willingly consider words during this, the Committee stage; but I would point out my difficulties to the Committee. I think the words "authorised by the Minister" might be too limited, but I might consider between now and the Report stage, whether the words "or any other person" might in some way be linked with the contracts of the main contractor. I hope I have conveyed to the Committee what is the intention, and I am willing to look at words to express that intention.

4.30 p.m.

Sir Richard Acland: I hope the Minister will look at the matter again. We are in an absolute orgy of giving the Minister every sort of power that he asks for, and these words seem to me to include the possibility that in a certain temper, for example, what have been known as the 12 dictators might simply give orders to everybody dealing in commodities of every conceivable kind as to precisely what they were to produce and at what times. 1 cannot see any real difficulty confronting the Minister in the way of leaving out these words altogether. He says he wants them in in order that con-

tractors may give instructions to subcontractors and so on. By the very terms of the Clause, the Minister or his office have to be satisfied that the terms are fair and reasonable. Therefore, the Minister's office will not be entirely ignorant of what is going on Every order which is given under this Clause by a contractor to a sub-contractor will have to go to the Minister's office. How else will he be satisfied that the terms are reasonable? The Minister must be satisfied that the terms are reasonable, and he cannot be so satisfied if neither he nor anyone else in his office has seen the terms. I hope the Minister will tell me how he is to be satisfied unless he or someone on his behalf does see the terms, and unless he can clear that up, I must assume that someone in his office will see that the terms of the order are reasonable.
If that is so, I think the order should in fact come from the Minister or his servant, so that we may have someone in this House who is responsible for the order and so that we shall not find, in two or three years' time, with the present march of Government by institutions outside the control of this House, that we have some men, we know not whom, taking complete control of every manufacturer—and you might extend it to the smallest people—and ordering them exactly what they are to produce, with no control in this House at all. I hope that unless some satisfaction is given on this matter between now and the Report stage, the matter will then be taken up and challenged more vigorously.

4.34 p.m.

Sir William Davison: The matter is comparatively small, although certainly there is a distinct issue here. It is pointed out that these words "or any other person" are much too general and vague, and I am inclined to agree. It was pointed out by the Minister that it will cause difficulties if he has to authorise a whole line of subcontractors. What we want to secure is that there is no person who is not concerned in the matter who shall be able to make this; request. If we put in the word "concerned" after"person," would that not secure what all parties desire? If it is upon the request of the Minister or another Government Department "or any other person concerned," that would mean that Tom, Dick, or Harry would not make requests,


but that he must have a contractor "or any other person concerned" making the request. I think that that would meet the views of all sides.

4.35 P.m.

Sir Irving Albery: It seems to me, from what has been said, that this matter requires further careful consideration; and there is another point that arises. This Clause conceives of the possibility of a contractor not being very desirous of undertaking a particular contract, and I wonder whether such a contractor might not seek to hand over the job to another contractor as soon as possible. If the Minister is going to hand this power over to every kind of sub-contractor, I do not know where we shall get to, because the sub-contractors again may farm out the work that they do not want to do to somebody else.

Mr. Naylor: One suggestion leads to another. Would not the case be met by altering the wording to "responsible person"?

4.36 p.m.

Mr. Burgin: I told the Committee that I would be prepared to look at the words, and I also told the Committee the reasons for these words being proposed. The word "sub-contractor" is not an expression of art, but I want to limit the Clause to people who may in fact be sub-contractors. Will the Committee look at Clause 7, Sub-section (1), which states:
The Minister may give directions to any person who by virtue of any contract, whether made with the Minister or another Government Department or any other person …
We have the words there that the contract may be made either with the Minister or another Government Department or any other person. Power is taken there to give directions to anybody who by a contract made with the Minister or another Government Department or any other person—

Mr. Lewis: Directed by the Minister.

Mr. Burgin: Certainly. The class of people to whom he may give directions is anybody who has a contract made either with the Minister or another Government Department or any other person. All that I am trying to do is to follow that out through the rest of the line. This is a Clause that provides various exceptional powers and sanctions, and one of the

sanctions is that if a contractor has failed to enter into a contract, directions may be given that he be obliged to enter into that contract. That is the purpose of the Clause. To whom are directions to be given? They are obviously to be given either to the person at the head of the line who is the contractor to the Department or to another Government Department, or to the person who, at any stage down the line anywhere, has entered into any arrangement with anybody forming part of the whole. That is the idea behind the Clause, and how to express it is a matter of drafting. I am perfectly willing to give the Committee an assurance that, now that I am seized of the doubts in the Committee's mind and now that the Committee has heard from me exactly what the Clause is intended to cover, I will look at the words again to see whether it would be appropriate to prevent what one hon. Member called Tom, Dick, or Harry interfering. I have no wish that Tom, Dick, or Harry should interfere, but I do not want to put in words which will in any way limit the chain of subcontractors, because in these armament contracts there is, from the raw material and merchants and brokers right through, a tremendous chain, long before you get to manufacturing anything, and all these persons must be included in the list of people to whom notice may be given.

4.39 p.m.

Mr. Silverman: Surely there is all the difference in the world between the words "or any other person" in Sub-section (1) and the words"or any other person" in the Sub-section that we are now discussing. In Sub-section (1) the Minister is taking power to give directions to any other person, and that is all right—no one objects to it—but in the Sub-section that we are now discussing the Minister is proposing to give to any other person very wide powers that would be exercised by that other person and not by the Minister. There is all the difference in the world between giving wide powers to the Minister to give directions, and giving wide powers to a large class of undefined persons to give directions to a wide class of other undefined persons. I suggest, therefore, that the purpose which the right hon. Gentleman has disclosed would be better served if he accepted the Amendment to leave out "or any other person." All that would happen would


be that the contractor, or the sub-contractor, or someone further down the line would enter into negotiations; in most cases they would agree, and there would be no difficulty at all. It is quite right that if somebody was recalcitrant, or awkward, or obstinate, there should be some power in someone to compel him to enter into a contract that was fair and reasonable, but what is suggested is that that power ought to be in the Government, in the Minister, and not in anybody else. All that would then happen would be that the sub-contractor would come to the Ministry and say, "This is what I propose as fair and reasonable, but So-and-so will not agree. You require him to agree." I do not think the Minister requires these words at all, and they are certainly dangerous.

4.42 p.m.

Mr. Spens: I may be very stupid, but I am bound to say that I think that under Sub-section (3, b) the only person who could come in and give any directions at all is the Minister. As a read Sub-section (1), the position is that the Minister may give directions to any person, not to any other person, who has any contractual relation either with the Minister, or a Government Department, or any other person, that is, another contractor. The Minister there can give directions either to a head contractor, or to a sub-contractor, or to a sub-subcontractor, to do something where there is an existing contract. Under Subsection (3), as I read it, the position is that where there are persons who are in a position to enter into a contract and who are unwilling to enter into such contract or such sub-contract, you may have either a person who would be a head contractor, or a sub-contractor, or a sub-subcontractor, a person who ought to enter into a contract and who has refused to take up a contract offered to him either by the Minister, another Government Department, or a head contractor. What happens when that person or that other Department complains to the Minister? For the first time the terms of the offer are seen by the Minister, and here I would suggest that the hon. Member who spoke from the Liberal benches had not got the matter quite right. The Minister's Department then makes up its mind on the questions, Was that a proper offer; were the terms fair and reasonable;

had the person who refused to do that necessary work any right so to refuse?

Mr. Silverman: That is not it.

Mr. Spens: With great respect, the hon. Member who interrupts has spoken three times already. I have spoken only once, and I should like to be able to make my remarks without interruption. If the Minister concludes that the terms are fair and reasonable, he is entitled to give directions to that person who has refused to do the work to do it. What the Committee has to make up its mind about in a Bill of this description is whether it is right to give to the Minister power, where a complaint is brought before him,, where a contractor complains of a subcontractor or a sub-contractor complains of a sub-sub-contractor, to give directions that that work shall be done by that man on those terms. In my submission that is the whole purpose of the Clause, and that is the point on which the Committee must make up its mind.

4.45 p.m.

Mr. Alexander: I always like to listen to the elucidations of the hon. and learned Member. I recognise that there is only one person who in the end can give the direction, and in the event of a person refusing to obey he would be liable to a charge. What I am pointing out is that in Sub-section (3) it falls upon somebody else than a Government Department or, behind the Government Department, the Minister, to make the request. Therefore, the powers given in the Clause are far too wide, and I am seeking to lessen them. I have listened very carefully to the Minister and I welcome the spirit in which he approached the discussion. If I felt sure that he was going to meet my point on the Report stage, I should be inclined to ask leave to withdraw the Amendment, but I am not sure that he is convinced. There is no mention of contractor in the Clause. The generality of the word covers something much more than a contractor.

Mr. Spens: The question is that of entering into a contract.

Mr. Alexander: That may be so, but it may not be a sub-contract.

Mr. Spens: Or a sub-contract.

Mr. Alexander: Let me put a hypothetical case, which probably would not arise. Suppose an organisation that I


know very well, the Co-operative Wholesale Society were asked to undertake a very large supply of clothing or boots and shoes and the Co-operative Wholesale Society said to some other large manufacturer: "We request you to supply an x quantity of this particular commodity," clothing, or boots and shoes. The manufacturer might say: "We do not mind doing work for the Government, but we are not going to do it for the Co-operative Wholesale Society," and they refuse. I dare say they might object very strongly to an organisation like the Co-operative Wholesale Society requesting them, with statutory powers behind them, in Subsection (3), which makes them an appropriate body to make the request. I should equally feel inclined, if some other firm made such a request to the Co-operative Wholesale Society, to say that I objected. That right is inherent in Sub-section (3), and that is something that the Minister has to get over. I have no objection and my hon. Friend the Member for Nelson and Colne (Mr. Silverman) has no objection to Clause 7 (1), but there is not the slightest reason why any other person should make that request except through the pursuance of some subsequent purpose of a contract which he holds. The words which we seek to leave out are very much wider than that, and unless the right hon. Gentleman can clear it up for us by the Report stage I shall have to press the matter.

4.49 p.m.

Mr. Burgin: I think we are getting to an understanding of our respective points of view. What I am concerned about is that I shall in no way lessen the width of the possibility of the area of subcontracting. I must have power for the contractor to talk to the sub-contractor, for the sub-contractor to talk to the sub-sub-contractor, and so on all along the line. Provided that my words "any other person" can be limited to mean what I mean, without excluding what I desire to obtain, I am willing to consider their limitation. I will consider that between now and the Report stage, but I want to make it clear that my intention is that the power to require an entry into a contract shall extend not only to the Minister and the main contractor but from that contractor to "any other person" capable of supplying, or likely to be required to supply any single article to

enable the head contractor to fulfil his contract with the Government. That is the point. If the Co-operative Wholesale Society had entered into a contract with the Government to supply large quantities of boots it ought to be possible for the Co-operative Wholesale Society to say to a supplier of leather: '' You shall supply so much leather."

Mr. Alexander: The point that we have to guard against is the possibility of contractors in such circumstances shifting part of their contract as a whole in order to maintain, for their own particular purpose, such measure of their own civil production as will suit themselves best, but not perhaps to suit the other party best. You must be careful what powers you give, and if you have to mobilise national productive capacity for national purposes, then the direction should come from the Minister or from a Government Department.

Mr. Burgin: The Minister cannot know the sub-contractor within the time that is necessary for this purpose. I am perfectly willing to look at the words, but the Committee must understand that subcontracting without limits is of the very essence of supply.

4.52 p.m.

Mr. A. Edwards: If I happen to be a sub-contractor and I am having some-difficulty with a sub-sub-contractor, and I come to the Minister and tell him of my difficulties, he has to be convinced first, under the Clause. Cannot the Minister of the Department issue a request for that other sub-contractor to give me my supplies? In that case, the right hon. Gentleman does not require these words. Without these words he has all the powers that he asks for.

Mr. Burgin: Mr. Burgin indicated dissent.

Mr. Edwards: If I am a sub-contractor and someone asks me to supply certain goods and I object to doing so, the Minister has power to request me to do so. I can go or another sub-contractor can go to the Department and ask the Minister to make the request for the delivery of the goods. I do not see that the Minister adds to his power in the slightest degree by having these particular words.

4.53 p.m.

Mr. McEntee: A point occurs to me in connection with this Clause which arose from our discussions on a Bill last week. There may be in this connection, as there was in the Bill we discussed last week, conscientious objection. Suppose the Minister requires a contractor or a subcontractor to enter into a contract, and the contractor or the sub-contractor says: "I do not want to enter into this contract, because I have a conscientious objection to making munitions of any kind." That is a perfectly legitimate objection. Surely, of an individual has the right, as he will have when the Bill we discussed last week becomes law, to refuse to take any part in the production of anything for war purposes, a person who is asked to carry out a contract ought to have an equal right to a conscientious objection in that respect. It may be all very well for the Minister to have power of direction, but if "any other person" is to give the direction I am afraid it may lead to very grave trouble in the future. Therefore, I hope the Minister will put in some other words which have not the application of these particular words.

Mr. Lewis: I should like to put this question to my right hon. Friend. Does he contemplate that it would be a proper thing for a contractor to accept from the Minister an order to supply something far greater than the productive capacity of his business warrants; then that contractor goes to other firms with whom, perhaps, he has never done business of the kind and insists upon them supplying him with the surplus which he himself cannot supply? Does the Minister consider that that would be a proper action on the part of a contractor?

4.55 p.m.

Mr. Burgin: I do not want to exclude that possibility. I want sub-contracting without any limit at all. I want it to be within the Minister's power to say— whether the sub-contracting principle is a desirable one or not—that the field of sub-contracts shall be unlimited. I do not want by any wording in the Statute to limit in any way whatever the area of possible sub-contracts because it is of the essence of supply. The mobilising of the national productive capacity means utilising to the full all our sub-contracting powers. Although I am willing to look

at the words, I must make it clear that the essence of the Clause must give me complete power of sub-contracting, without limits.

Mr. Edwards: Will the right hon. Gentleman point out how it is incomplete without these words?

Mr. Burgin: Without these words no contract made by a contractor with a sub-contractor is included in Sub-section (3).

Mr. Edwards: If a contractor comes to the right hon. Gentleman he must convince him that it is fair and reasonable, and it is then a formality for him to issue the direction.

Mr. Burgin: I do not want to keep popping up like a. jack-in-the-box, but the hon. Member has not done justice to the words. The Minister comes in only after there has been a failure to enter into a contract. I agree with my hon. and learned Friend the Member for Ash-ford (Mr. Spens) in his explanation of the Clause. He was entirety accurate. The Minister only comes on the scene to give directions after the events contemplated in the Sub-section—after unwilling ness to enter into a contract.

Mr. Silverman: The failure.

Mr. Burgin: Not quite failure— a refusal. A failure to agree. There might be a letter from a firm, saying: "We would rather not do this business. For one reason or another we do not propose to do any Government work." It might be that for some reason or other a firm with the machinery, the labour, the management and with the productive capacity, who have been invited to do something, write a letter or intimate their unwillingness to enter into the contract. It may be nothing to do with price. It may be for the reason that the right hon. Member for Hillsborough (Mr. Alexander) has suggested, that they want to keep their civilian business, and that, despite national needs, they do not want to do Government work. That may be after they have been asked not only by the Minister or the Government Department or—

Mr. Silverman: There is nothing to stop the Government from asking anybody.

Mr. Burgin: The hon. Member does not follow me. I am arguing whether it is


necessary to put in any other words. The sanctions contemplated by this Subsection cannot operate until the events described in the Sub-section have occurred.

Mr. Silverman: That is not so.

Mr. Burgin: I think I probably know my own Clause. The Minister may have asked a firm, a Government Department may have asked a firm, a contractor may have asked a firm, or a sub-contractor may have asked a firm, and the draftsman instead of saying "contractor" or "subcontractor" has put in the words "any other person." The Committee now suggests that those words are too wide. I am perfectly willing to consider whether they are too wide, but while I am willing to examine them and to see whether they are too wide, I intend that the provision shall include any other person who may sub-contract.

4.59 p.m.

Mr. Messer: With due respect, I do not think that there is the degree of importance in the Amendment that appears to be attached to it. I do not see how in the Clause you are going to specify all the people you want to include. That being so you have to find a form of words that will prevent the possibility of there being an abuse of the phrase "any other person." The difficulty might be got over by dropping the word "any." In addition to a Government Department, a contractor and a sub-contractor, there are people who are agents and who are liaison officers. In the constituency which is fortunate enough to be represented by me there is a very big cabinet works, and in that cabinet factory there is a great deal of miscellaneous work being done, some of it probably the construction of hospital lockers for the Government. They may be entrusted with the task of seeing that the Government order is capable of delivery, and they may be unable to do it unless they can say to a firm supplying timber or some commodity that may be required that they have got to supply it. It is obvious that you have to have something wider than the specified term of Government Departments, contractors, and sub-contractors; at the same time I do not think that "any other person" ought to be there, because it means that you can have people who will set themselves up and will be quite

irresponsible to anyone who may then be able to instruct because they are "any other person." Having shown that the instruction that they have given is for the purpose of the successful carrying out of a contract, they will be entitled to compel the firm to proceed. 1 hope the Minister's suggestion will be accepted, but that he will frame words which will prevent the possibility of abuse, because that is what is required. It is not a question of principle so much as a question of the right form of words.

5.2 p.m.

Mr. Silverman: The Minister has been trying to explain why he needs these words. It was suggested to him that he had all the powers that he wanted without them, and that these words only gave rise to a number of difficulties and were really of no value to him. If it is reported to the Ministry that some contract could not be entered into, the Ministry can request the awkward person to enter into the contract, and if he still refuses, the Minister can compel him whether "any other person" is in or not.

Mr. Burgin: That is true. I could, and that would have the precise effect of delaying the whole thing.

Mr. Silverman: It would have no such effect at all. There would be no more delay than under the Clause, because before the Minister can intervene at all the man has to come along and say, "This is my scheme. These were the terms. You must satisfy yourself that they are fair and reasonable," and at the same time that the Minister is satisfying himself about that he may be requesting the person who will not agree to enter into it. There is no difficulty about it. It does not lead to any further delay. The Clause without the words "any other person' gives him all the power that he is contending for, whereas with the words in you have the possibility of all sorts of dangers, including the danger that some employer can go to an individual workman and require him to make an individual article in his own time without any collective bargaining of any kind.

5.4 p.m.

Mr. Edwards: The Minister told me that I was not doing justice to the words before me. I do not think he is doing justice to himself. He is putting in words which are absolutely meaningless. The final


sanction is with the Minister, who may give the person directions, and he has that without these words. What he is trying to impress on the sub-sub-contractor is that if he does not accept instructions from another contractor there may be an appeal to the Minister. The Minister is suggesting that the sub-contractor can enforce it and that the man who refuses to do so may be reported to the Minister, who must satisfy himself that the contract is fair and reasonable.

Mr. Burgin: Must satisfy himself that the sub-contractor has refused or"failed," in the past tense, to enter into it.

Mr. Edwards: "Which appear to the Minister to be fair and reasonable." If I say a contractor has asked me to accept a sub-contract which is not fair to me I have an appeal to the Minister, who decides whether it is fair or not. It is implicit in the Clause without these words at all. The words are redundant. The right hon. Gentleman cannot find any meaning in them whatever.

Mr. Alexander: The Minister now offers that if I will withdraw the Amendment he will be prepared to insert the word "concerned" after "person," which would to a large extent limit the words. It does not wholly meet my major point but if the Minister will insert the word "concerned" I am prepared to withdraw my Amendment.

Mr. Burgin: I shall be very happy to meet the wishes of the Committee by inserting the word "concerned," to indicate that "any other person" is not completely at large, but that it is someone avowedly having something to do with it.

Amendment, by leave, withdrawn.

5.7 p.m.

Mr. Pickthorn: I beg to move, in page 8, line 14, after "given," to insert "and the material conditions."
The Minister has said on the last Amendment that contract or other arrangement might very well go off on some matter which has nothing to do with price. We are now on the only, or at least essential Sub-section which provides for arbitration, under (a) in contractual cases and under (b) where the arrangement arises or is sought to be made to arise out of a request. In both cases the words as they stand seem to me to limit

the right of arbitration very strictly to the question of price or remuneration. It may be that that is; the intention and that the Committee ought to acquiesce in it. I have put down the Amendment in order that I and perhaps others in the Committee may be more clear whether that is the Minister's intention and whether it is the desire of the Committee that that intention should be on the Statute Book.

5.9 p.m.

Sir Herbert Williams: I hope the Minister will give sympathetic consideration to the principle of this Amendment. The terms of a contract are not only the price, but quantities, the dates at which they are to be delivered, and the rates of delivery. A direction might be given to a manufacturer involving him in a task beyond his scope and he might have a legitimate sense of grievance. He might be treated roughly. I think the power of arbitration ought to go beyond the question of price and bring in the question of delivery, or any other considerations which are important in any contract.

Mr. Burgin: I had no intention originally that the only matter of arbitration should be price, and the Bill as drafted is not intended to limit the arbitration to price. If my hon. Friend will allow me between now and the next stage to consider whether any revision in drafting is requisite, I shall be happy to deal with the matter on those lines.

Sir H. Williams: I am glad to hear what the Minister has said. If he reads paragraphs (a) and (b) I think that, as they stand, it is clear that they limit the arbitration to price.

Mr. Hely-Hutchinson: A little later on it is laid down that the arbitrators shall have regard to all relevant considerations. That opens up very much wider questions which many of us who would like to support the Amendment would like to see.

Mr. Pickthorn: I understand that the Minister thinks other elements in the contract besides price are already covered and that if they are not the Minister will see to their covering at a later stage.

Amendment, by leave, withdrawn.

5.13 p.m.

Sir Arnold Gridley: I beg to move, in page 8, to leave out lines 22 and 23, and to insert "to be selected as hereinafter provided."


I should like to ask you, Colonel Clifton Brown, whether it would be for the convenience of the Committee if this Amendment and a subsequent one to leave out similar words in. page 9, line 42, and the new Clause setting up a panel of arbitrators were all discussed together?

The Deputy-Chairman: They are both consequential on the first Amendment, and the next Amendment on the Paper in the name of the hon. Member for Duddeston (Mr. Simmonds) would also fall into this Amendment.

Sir A. Gridley: I feel now that the Committee has arrived at a point on which there may be a vital difference between the Minister and ourselves. Under the powers which the Bill seeks to give on arbitration, apparently the Minister can appoint all the arbitrators who will sit on his panel and he can then decide which of these gentlemen may constitute an arbitration tribunal. I have the very strongest objection to a man having it within his own power to decide, through some third party whom he has appointed, whether he is in the right or in the wrong. In other words, I object very strongly to the Minister being the judge in his own case.
Let us consider the very complete powers which the Minister will have over industry. Under Sub-section (3) the Minister has power to command firms, whether they are willing or unwilling, to enter into a contract for the delivery of such articles and the carrying out of such works—these are the important words—on terms which appear to the Minister to be fair and reasonable; and, if such a firm refuses to enter into a contract, or to accept any terms that may be suggested, it may be compelled to carry out the work. With that I do not disagree, but, if a dispute arises, the firm is at the mercy of an arbitrator appointed by or through the Minister himself. The very fact that the House intends, rightly, to give to the Minister very wide powers in the circumstances with which we are faced, is the strongest possible reason why he himself should not be open to any possible shadow of suspicion that he is interested in any dispute or that he can control in favour of the Ministry any decision that may be given. I am sure that, if firms can feel that there is a completely independent arbitrator or arbitrators to whom disputes may be referred, there will be far

less hesitation, if there is any hesitation at all, in carrying out any work which the Minister may instruct them to do.
If the Minister agrees in principle that he and his Department should have no responsibility whatever for deciding who the arbitrators are to be, if he accepts the principle, my hon. Friends and I are not particularly wedded to the exact suggestion of our Amendment. Those of us who have been engaged in business have at one time and another entered into commercial and engineering contracts of varying kinds, and are accustomed in those contracts to arbitration clauses. In the case of engineering contracts, for instance, it is customary for the arbitrator, failing agreement between the parties, to be appointed by the president of one or other of the learned engineering societies. Very large and important matters may be at issue, some on engineering points, some on financial points, some, possibly, on points of legal interpretation of contracts; and where a dispute was sufficiently large to justify the appointment of three arbitrators, I myself, if I were engaged in such a dispute, would have complete confidence in three, one being a barrister recommended by the President of the Law Society, another a man of experience in engineering appointed by the President of the Institution of Civil Engineers, and, if any involved question of accountancy were concerned, such as what is or is not usable or redundant capital in carrying out a large contract, I should have complete confidence in an arbitrator appointed by the President of the Institute of Chartered Accountants. It is for these reasons that we have suggested the particular form of tribunal set out in the Amendment.
I should like to point out, also, that we provide for assessors. The chairmen of the panel of arbitrators may in certain cases decide that the dispute justifies one arbitrator only, and it may be that the Minister, or the firm with whom he is in dispute, does not particularly like that arbitrator. In such a case it would be open to either party to the dispute to appoint their own assessors, and then they can be quite sure that their respective interests will be properly looked after. I notice that the Bill is silent as to who, if an arbitration takes place, should bear the costs of the arbitration. My hon. Friends and I have not attempted in this


Amendment to deal with the question of costs, because the Bill leaves it an open question, but, if arbitration has to be resorted to, I would suggest to the Minister that some new Clause should be incorporated in the Bill providing that the Arbitration Acts shall apply. If there has been an omission, wittingly or unwittingly, by the draftsman, I suggest that that is a point which should be looked into.
May I now say one word to hon. Gentlemen opposite? I hope they will see their way to support the Amendment, if not in the form in which it stands now, in some such form. I would base my argument on this hypothetical supposition. Suppose that I, as a manufacturer, decided that I would put up a new factory in which to carry out Government work, and that I said to 500 men in the locality, "I am going to build this factory, and I am going to employ the whole lot of you; but the wages you are going to be paid we will settle hereafter. You need not worry about it now, because, if we cannot agree, I will agree to its being decided by an arbitrator, but that arbitrator must be drawn from a panel appointed by me." That is the position under the Bill as it stands. I cannot see hon. Members on the other side, whether connected with trade unions or otherwise, agreeing to put themselves in a position of that kind. I certainly would not do so. On these grounds I venture to hope that hon. Members opposite will see fit to join with us in getting a reasonable adjustment made of the present proposals for arbitration.

5.24 p.m.

Mr. Herbert Morrison: I respond to the invitation of the hon. Gentleman opposite to express our views on this matter in relation to the wording of the Amendment and the hon. Gentleman's speech. We cannot see why there should be a different procedure with respect to the appointment of these arbitrators from that, which prevails with respect to arbitrators in a number of matters that affect the interests of labour. It is already the practice of the Ministry of Labour, in connection with disputes where labour is involved, to appoint an arbitrator from a panel of arbitrators constituted by the Minister himself. Some of them, I agree, are nominated by the Trades Union Congress, but the question whether the Minister accepts them for

inclusion on the panel or not is a question for the Minister, and, once they are on the panel, it is the Minister who makes the selection from the panel. I think I can say that, broadly speaking, although the trade unions do not always get what they think they are entitled to from arbitration, they would not question the general fairness of these arbitrators according to their lights and according to the purpose of the legislation they are administering.
The fact must be faced that the kind of arbitration here envisaged is an arbitration about an essentially commercial matter— a dispute as to the price which should be paid for goods or services required by the State. I should have thought that that was' not a matter in which you have to get. the type of abstract judicial fairness that you get in the High Court of Justice. I am not criticising at this juncture the kind of justice that is dispensed by the courts, which, generally speaking, have a very high reputation, though sometimes cases occur over which some of us on one side or the other feel like exploding. But the function of the High Court is essentially justice of the legal, judicial order, on the interpretation of Acts of Parliament or regulations made under Acts of Parliament. It is not that kind of justice that has to be done here, but commercial justice— justice in relation to the broad accepted facts of the commercial situation. It is an administrative or commercial fairness as between the State on the one hand and the suppliers of goods or services on the other. Knowing how State Departments work, knowing how Ministers are always encouraged to be fair in these matters in the appointment of arbitrators, and how very difficult it really is for a Minister to be grossly unfair, even if he wanted to be, I should have thought that the constitution of a panel of arbitrators by the Minister concerned, and the appointment of arbitrators from that panel, is really calculated to do substantial justice between the State and the person concerned.
There is another danger of which we must beware, and into which we can easily fall, and that is why it is so important that these men should be men of fairness on the one hand and common sense on the other. They need, for the proper discharge of their administrative or quasi-judicial functions, to be fair-minded, to be objective in their thought; but they


need also to be men of common sense and of a practical frame of mind. It happens now and again that the value of land as between a local authority that wants to buy it and the vendor who is required to sell it has to be assessed, and there is a type of arbitrator engaged in that work who just does not earn his money. He takes the claim of the local authority as to what the price ought to be, and he takes the claim of the vendor who is being compelled to sell his land as to what he thinks the price ought to be; and this type of arbitrator thinks he has done his job when he fixes his award about midway between the two. That type of arbitrator exists, and I say that he is not doing his job. His function is to fix a value which he thinks is fair, but if he does it in that way he is simply not earning his fees, and the result is that local authorities and owners of land, after some experience of this kind of mathematical foolery, both manipulate their figures in order to try to get the result which they think the working of this man's mind will produce.
In arbitrations of the kind we are considering, that sort of thing might easily occur, and, if the Minister has the fear that when he goes to arbitration he will get that kind of rough-and-ready reasoning, he may be driven, as he ought not. to be driven, into coming to conclusions about prices that are influenced by the kind of conclusion that may be arrived at by the arbitrator, or the Minister may feel that he has to give way to a contractor or subcontractor who is asking an exorbitant price, because he cannot get the kind of justice that he ought to get from the arbitrator. It is of the greatest importance, not that the Minister or anybody else should manipulate the appointments in order to produce a givenresult— I am quite sure he will not do that—but that the public interest shall be protected against the type of meticulous arbitrator with an essentially legal mind, quite suitable for the courts, but not for a job of this kind which requires two qualities: fairness on the one hand, and common sense, or an understanding of commercial justice, on the other. Therefore we think that this is not an Amendment we ought to support.

5.31 p.m.

Mr. Burgin: I have sympathy with a good deal of what the Mover of the Amend-

ment said and with the whole of what the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) has just declared. I will tell the Committee at once that this idea of an arbitration tribunal which could be thought by some people to make the Minister judge in his own cause filled me with some disquiet. At the same time the idea of the perfectly cold, theoretical arbitration tribunal, such as the right hon. Member for South Hackney referred to, filled me also with a certain amount of dismay, because I am quite sure that that is not the kind of arbitration that will be wanted for the disputes which will arise under this Clause. The Committee will realise, after the Debate on the Second Reading and yesterday's and to-day's Debates, the tremendous width of possible discussion that will come before these tribunals. We are dealing with supply in all its aspects, from the intricacies of wool and worsted and cotton for clothing to the highest branches of engineering. It is no good taking a lawyer or an engineer at large for deciding matters of that kind, which may depend on a knowledge of the customs of the trade, on industrial experience, or on broad business acumen for a decision. My idea in framing the Bill was to meet possibilities of that kind by having a panel which would be wide enough to include all those varieties of specialised interests. It may be said, 'If you give the Minister power to pick the actual one or three from the panel, you are going unnecessarily far."
While I cannot accept the Amendment, I will make this offer: that, while retaining the power to select the panel, I should be willing to have some provision inserted in order that the panel should be allowed to elect its chairman, and that the particular arbitrators for any dispute should chosen, not by me, but by the chairman of the panel, from amongst the members of the panel. If that commended itself to the Committee, I should be willing to make that change between now and Report. My idea of making the panel was to include specialised knowledge, and it was merely the diversity of knowledge necessary which induced me to think that the Minister should select the particular arbitrator. If the proposal I have made commends itself to the Committee, the panel would be broad enough to include representatives of labour, and I should


think there would be a good deal to be said for the proposal. What I had in mind was to make a fairly large panel of appropriate people, all above suspicion, all experts in some part of the area covered by Supply, who would have power to elect their chairman, and the chairman would have power, on being told that there was a reference, to select the particular arbitrators for that reference.

5.36 p.m.

Mr. Simmonds: I am sure the Committee is indebted to my right hon. Friend for the suggestion he has made, but my hon. Friends and I—who are responsible for the Amendment to which you referred, Colonel Clifton Brown—do not think that the Minister has gone quite far enough. In substance, the proposal he has now made is that contained in the original Bill. We feel that the premises of the argument by the hon. Member for Stockton (Mr. Harold Macmillan) are correct, but those premises lead us to a somewhat different conclusion. We fancy there is something in what the Minister said—that he did not want to get the procedure too cumbersome. If he adopted a suggestion something like that contained in our Amendment, he would not have too cumbersome a procedure, and he would be free from the charge which can be laid at his door as the Bill stands. It is wise to have an arbitrator, if you can, on whom both parties to the dispute have agreed.
I think the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) thought that this worrying about who the arbitrator might be and whether he would be acceptable to the other parties to the dispute was a little hypothetical and unreal. I might tell him of a case which was brought to my notice only recently by a constituent of mine. He had a dispute with one of the Defence Departments over a substantial contract. He found, to his dismay, that the arbitrator whom the Minister proposed to appoint had until recently been the professional adviser to the Minister on the subject of prices for the type of contract in question. He never suggested that the arbitrator would not endeavour to arbitrate fairly and equitably; but everybody knows that if one day you are part of an organisation and the next day you are asked to arbitrate between that

organisation and a, third party, you are put in a desperately difficulty position.
I think the Minister, in his own interests, would be wise to take some steps so that the party with whom he is in dispute shall agree on the arbitrator. If, therefore, he would retain his panel of arbitrators, but: adopt the procedure suggested in our Amendment, there could be no dispute as to the equity of the arbitrators. These arbitrators generally will be concerned not with minor matters —they will be settled quietly—but with cases where hundreds of thousands of pounds are involved. The Minister will put himself in a very difficult position unless he gives the other party to the dispute some say in the appointment. Even if he does not feel happy about our Amendment, I hope he will go a good deal further than the offer he has made.

5.41 p.m.

Mr. Hutchinson: The importance of this Amendment seems to be this: What we have to secure is that the parties concerned shall have confidence in the tribunal which is to be set up. If the arbitrators are to be chosen by the Minister, and by the Minister alone, although it may be that they will deal in a perfectly fair manner with the matters which come before them, they will not command that confidence from the parties whose affairs they will have to review which it is essential that a tribunal of this character should have. The right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) made some observations about the arbitrators before whom the affairs of the local authorities have to come. I am quite sure he did not intend that the Committee should apply those observations to the official arbitrator who adjudicates on affairs arising under the Acquisition of Land Acts. He certainly, in my experience, commands the respect of all the parties who appear before him, and I would ask my right hon. Friend whether he would not adopt a procedure for selecting these arbitrators somewhat similar to the procedure adopted in selecting the official arbitrator. My recollection is—perhaps hon. Members will correct me if I am wrong—that the official arbitrator under the Acquisition of Land Acts is selected by the Lord Chief Justice of England, the President for the time being of the Surveyors' Institution, and the Chairman of the Law Society. Arbi-


trators selected by such bodies as that will, I am sure, command the confidence of parties who come before them.
If my right hon. Friend feels that that sort of procedure is not going to produce the type of arbitrator he wants—and I agree it is desirable to have somebody with a commercial standpoint—let him be one of the persons who appoints the members of the panel, but I hope that when he appoints them he will associate with himself in the selection somebody who can be regarded as impartial, and in whose selection the public may have a greater measure of confidence than they would have in a panel selected by my right hon. Friend alone.

5.45 p.m.

Mr. Lees-Smith: The right hon. Gentleman made an appeal to the Committee to come to agreement on this problem, and he has endeavoured to obtain agreement on both sides of the Committee. My right hon. Friend the Member for South Hackney (Mr. H. Morrison) has explained that so far as his hon. and right hon. Friends here are concerned we cannot agree to a panel chosen by these various outside organisations, but that the panel should be chosen by the Minister himself. We come to the question as to how the arbitrators are to be appointed from that panel. He has made a proposal, that instead of the arbitrators being proposed by himself, the panel should select its chairman, and the chairman should appoint the arbitrators. To that there is one difficulty. The panel is merely a list of names. It is a body which does not meet together, and therefore you would have a panel without any corporate existance at all appointing a chairman. The panel would perhaps meet in a corporate capacity once in two years and appoint a chairman, and then not meet again. The whole process of appointing a chairman would have to be arranged through the various negotiations before the meeting of the panel took place. I imagine that what would happen in practice would be that the Minister would suggest whom the panel should appoint. Therefore I do not think that the method of the Minister is a happy one for the appointment of chairman.
There is a very good precedent which, I believe, might meet with general satisfaction, and that is the Industrial Court.

That court settles hundreds of disputes a year in regard to wages. When I was at the Post Office we used to have millions of pounds at stake in the decisions of the Industrial Court. The chairman appoints the arbitrator. The difficulty of finding the right chairman is got over by the arrangement with the Ministry of Labour. The chairman is Sir Harold Morris. I suggest to the Minister that that would be the way to overcome the difficulty.

Sir H. Williams: Who selects the arbitrators? Are they selected entirely by trade unions or by employers?

Mr. Lees-Smith: The chairman of the panel of arbitrators selects the arbitrators.

Sir H. Williams: Who appoints the panel of arbitrators?

Mr. Lees-Smith: The panel of arbitrators is appointed by the Minister.

Sir H. Williams: In this case, the proposal is that the panel arbitrators should be appointed by one of the interested bodies. I am glad that the right hon. Gentleman has brought in the Industrial Court because they are not appointed by only one of the interested bodies, and if he will bring in an Amendment on these lines I will support it.

Mr. Lees-Smith: Undoubtedly the: panel is appointed by the Minister, and he takes into account the names suggested by employers' organisations and others. I am not discussing how the panel should be appointed, but I am pointing out that the method adopted by the Industrial Court in respect of chairmen has been one which for years has been accepted, I believe, without any criticism. If the Minister would consent to appoint the chairman in that way, we on these benches would agree to the suggestion.

5.50 p.m.

Sir H. Williams: We have had a most valuable suggestion that the Minister should appoint one half of the panel. The right hon. Gentleman will realise that his right hon. Friend advanced no arguments at all for his proposition. He merely says, in effect, that you get a gentleman to express an opinion about the value of land, and another gentleman to express another opinion. You put those opinions together, divide them by two, and the result is a form of arbitration. The value of land is always


a matter of opinion. We are not dealing with matters of opinion, but with matters of ascertainment, and we want people who can use their capacity in a satisfactory manner. The Industrial Court is just what we want. The appointing Minister cannot be the Minister of Supply. Let it be the Lord Chancellor who appoints the chairman. The rest of the names could be suggested either by the trade unions, one of the interested parties, or the employers, the other interested party. Let us let the Minister appoint one-half of the panel and let some association of manufacturers, the Asociated Chambers of Commerce or the Federation of British Industries, act as nominators on behalf of the contracting firm. Then we would have a panel which everybody would trust, with a chairman appointed by an impartial person. [Laughter.] Hon. Members opposite may laugh, but it is precisely that for which the right hon. Gentleman asks. I seized on his suggestion.

Mr. H. Morrison: Is the hon. Gentleman going to forget that they are not the only elements in capitalist society? Is he forgetting the trade unions and the co-operative societies?

Sir H. Williams: In this matter the trade union interest is not involved. Between whom will a dispute lie? It will lie between a contractor and the Minister. Clearly the two interested parties will be the Minister and the contractor, and if you are to have the interested parties nominating part of the panel, they will be the right people. If a dispute brings in rates of wages, I agree that there ought to be an element on the panel nominated by the trade unions. If that is likely to arise, I accept and support most enthusiastically the suggestion of the right hon. Gentleman, which is the complete solution of the problem.

5.53 p.m.

Mr. H. Morrison: I only want to point out to the Committee where the hon. Gentleman the Member for South Croydon (Sir H. Williams) is getting himself. He is merely backing up a series of interests. The Minister is the public interest, or ought to be, and let us hope that he is, and therefore the persons that he appoints ought to be fair-minded, impartial people. The hon. Gentleman wants to weight them down with sheer

capitalist interests who are there because they are capitalist interests, with interests against the State and against the community.

Sir H. Williams: No.

Mr. Morrison: Oh, yes. I should not expect anything else from that quarter. It is the purpose of certain Members opposite to see that, above all, private interests shall have their fingers in all these pies where the public interest is concerned.

Sir H. Williams: The right hon. Gentleman the Member far Keighley (Mr. Lees-Smith) said that when he was at the Post Office he used the Industrial Court in order to deal with disputes between himself and his employés. His employés were the people trying to get more money out of the State. What is the difference in principle? There is no difference between a workman getting an extra is. an hour and a contractor getting an extra is. an hour. One: is no higher minded than the other. Let us be frank.

Mr. H. Morrison: I think that it is a totally different operation. I suggest that the Bill as drafted is right, and that it is far better that the Minister, on the advice of his officers, should select people technically competent for this work to discharge their duty fairly in relation to commercial common sense and to technical facts. I do not like the thing at all. This business of bringing in arbitration for this kind of affair is bound to have its difficulties whichever way it works. On the other hand, I admit the difficulty, if you look into this world of private interests, of resisting a third party being brought in. I am not sure, even as the Bill is drafted, that it will work as well as it ought to do from the point of view of the public interest, but I am certain the line of argument suggested by the hon. Member for South Croydon, admittedly a perfectly logical argument for him and his frame of mind, is really pernicious from the point of view of the public interest. He would have a sort of capitalist soviet to deal with this kind of thing and I want to see a bit of clean administration.
The hon. Gentleman the Member for Duddeston (Mr. Simmonds) put a terrible case, in his judgment, where a person appointed as a sort of arbitrator had previously been a technical adviser to the Minister. If it is of any comfort to


the hon. Member, I know of people appointed as chairmen of tribunals where public interests were to come before them who had previously appeared as legal advocates of capitalist interests before that tribunal, but I never heard of any protest from hon. Members opposite. If that argument is to be produced it should be applied all round. The theory of these appointments is that, because a person has acted professionally in advising a Ministry, it does not necessarily debar him from advising the Minister fairly on a matter of this sort. Therefore, the Minister would be wise to leave the Clause as it is. I do not say that any solution is absolutely perfect, but on balance it is a fair procedure on these matters.

5.57 p.m.

Mr. Burgin: I am not able to accept the Amendment. I gather that we are discussing really three Amendments together, and not one of them can be accepted by me. I have told the Committee that I want something much more than impartiality, integrity and character. I agree that nominees of the Lord Chancellor, and the President of the Law Society, and the President of the Surveyors' Institute would all have these qualities, but I want more. The particular matter in dispute may be some coal or engineering matter or some question of costing and large-scale business transaction. Assessors are a quite unsatisfactory addition to a tribunal. They only lengthen its tenure of arbitration and probably add to the expense. I want a tribunal of thoroughly intelligent people, sufficiently widely chosen, so that there will be the probability that among the panel there will be somebody recognised by everybody as obviously capable of dealing with the particular dispute. I went on to suggest that if it commended itself to the Committee, I would give the panel the right to select each member of the tribunal appointed for a particular arbitration, and would leave that to the procedure of the panel itself. I quite appreciate that that would mean appointing a chairman, a secretary and, so to speak, a business committee, and presumably some inner panel, so that an engineering dispute could go to one of three, and an accountancy dispute to one of three, and so on. But I prefer the Clause as it is to the Amendment.
May I point out to my hon. Friends on the Government Benches that some of the circumstances in which this arbitration would come into existence would be in a matter of sanction where a contractor has failed? We are dealing here with what may be an instance where the contractor has let down the Government by failing to supply, and in these circumstances the Minister gives directions that the work should be done, and then there is an arbitration as to the price. In these circumstances it may be very important, while having everything for which the Committee have asked with respect to character and integrity, to have the skill which can really determine what should be the right solution for that particular arbitration.
I must ask the Committee to reject the terms of the Amendment, and I cannot accept the suggestion that there should be an agreement between the contractor in default and the Minister as to who should be the arbitrator. I cannot accept that, and I think, for the reasons 1 have given, that a tribunal consisting of nominees selected by the Lord Chancellor and other distinguished legal luminaries is inapplicable to the type of rough business justice which ought to be given by someone who, knowing the circumstances, can place himself in the shoes of the person in regard to whom the dispute has arisen. Unless the suggestion I have made, that the tribunal itself should in some way select the actual arbitrator for a particular dispute, is accepted, I think it would be in the interests of all parties that I should both select the panel and select the particular individual. If that is thought to be too much I would willingly delegate the appointment of a particular arbitrator from the panel to the chairman of the panel, but that must be a matter on which the Committee should give me some indication of its mind.

Sir A. Gridley: I must confess that I am far from satisfied with the line which the Minister persists in taking. At the same time, I know how anxious the Government are to get the Bill through as quickly as possible in view of the heavy programme in front of them. Would the right hon. Gentleman be prepared to discuss this Clause between now and Report stage with the representatives of all parties to see whether a little further discussion might not lead to an agreement?

Mr. Burgin: I do not think that any offer from myself to discuss the matter between now and Report is necessary. I must go forward with my Measure, but if on Report stage some agreement is brought before me by all the different parties concerned, a combined solution, it would have a considerable effect on my mind.

Mr. Lewis: As the Minister has not yet made up his mind that he will give the selection of a particular arbitrator into the hands of the chairman, and still contemplates retaining that right himself, may I put this case to him? Suppose he selects a certain individual arbitrator to act in a particular case, and suppose he is very dissatisfied with the award that is given. And suppose that a somewhat similar case comes up afterwards, would he appoint the same arbitrator? If he would not, clearly he is tampering with justice. He has originally appointed these arbitrators saying that he believes they are perfectly qualified to judge, and because he is dissatisfied with a given judgment I gather that he would not appoint them in a similar case shortly afterwards. That is a very vital point and I think we should hear what the Minister has to say.

Mr. Burgin: What I understood the hon. Member to say was this, and if I have misunderstood the hon. Member perhaps he will correct me. What I thought the hon. Member said was, assuming that out of this panel of arbitrators a particular arbitrator is appointed because you think he is the right man for the dispute, and when it is decided you are dissatisfied would you in a precisely similar set of circumstances choose the same arbitrator? I should have thought not. [Interruption. ]I would still choose an arbitrator from the same panel, but I do not think that anyone should be asked to give an assurance that it should necessarily be the same one. 6.6 p.m.

Commander Sir Archibald Southby: I apologise to the Committee that circumstances beyond my control prevented my being present to hear the Amendment moved. I must confess that I do not think the Minister should be not only the judge but the selector of the jury in a case which requires arbitration. From what has just fallen from his lips in reply to the case put by the hon. Member for Colchester (Mr. Lewis) I understand that

the Minister who:s to select the panel, and who is to take from that panel the arbitrator to arbitrate in a particular case, now says that if the arbitrator gives an award against the Minister then, should an exactly similar case arise he would not put the same arbitrator to judge that case-but would select someone else. Surely the Committee would be very unwise—this is no party matter at all—to put into the hands of the Minister the power to be not only judge and jury, but the selector of the jury, in any case in which the Minister is involved. I think that the old practice should be maintained in this Bill and that a panel of arbitrators should be chosen from outside. I understood my right hon. Friend to say that he was prepared to concede the point that he should not select from the panel of arbitrators a particular arbitrator but would leave it to an independent chairman of the panel. I think that as far as this Committee is concerned there is not very much in that offer. If the Minister has already selected the whole of the panel he has in fact selected the people who please him and who may not necessarily please the heads of industry or indeed the workers in the industry which may be involved in a dispute.
I would like to see a quite impartial panel set up with members of the legal profession and particularly with a member of the Trade Union Council on the panel. [Interruption.] I do not suppose that the hon. Member for West Fife (Mr. Gallacher) likes the Trade Union Council very much, knowing what his political outlook is. I like the trade union movement and I think that in many cases where there is a dispute with the Minister the point of view of the people employed in the particular firm will have to be taken into account. Not only from the point of view of the workpeople but from the point of view of everybody concerned with the dispute it will be better for someone to be on the panel who would have the confidence of those engaged in the industry. I view with great apprehension what the Minister has just put forward in answer to the question by the hon. Member for Colchester, and I beg him to give us a promise that between now and Report he will consider the suggestion to set up an impartial tribunal which will have the confidence not only of the Committee but of everybody concerned in any dispute which 1 may arise.

6.10 p.m.

Mr. Lees-Smith: May I act in the capacity of arbitrator in the dispute which seems to be going on, and may I say that certainly listening to the question put by the hon. Member for Colchester (Mr. Lewis) and the Minister's reply, it appears to me that the reply has been twisted into something which the Minister did not originally say. I understood the question was this; suppose you appoint an arbitrator who has given a decision which shows that he is a bad arbitrator—

Mr. Lewis: Perhaps the right hon. Gentleman will allow me to say what I did say. I said: if the Minister appoints an arbitrator for a given case and if the Minister was profoundly dissatisfied with the judgment of the arbitrator —

Mr. Lees-Smith: That is a form of words which is capable of two or three interpretations. It was a question put with great skill and was bound to lead the Minister into difficulty. If you say that the Minister was "profoundly dissatisfied" it would lead to the conclusion that the Minister thought the arbitration was rather in judicial in its character. The mere fact that the arbitrator found against the Minister does not necessarily mean that the Minister would be profoundly dissatisfied, and when the question is put in the form that he was "profoundly dissatisfied," it means that the Minister feels there was something wrong in the arbitration, and in those circumstances the right hon. Gentleman is justified in saying that he would think twice before he appointed the same man.

Mr. Burgin: And similarly, if the arbitration is very much in the Minister's favour it does not follow that you bring that particular man in to solve every similar dispute. You draw from the panel the man who is best fitted for undertaking the particular dispute.

6.11 p.m.

Sir Percy Harris: We have had a very interesting discussion so far and my sympathies are with the Minister. I am sure that arbitration is the right method and system, and we need to get a panel of competent, efficient and trained men who can be trusted to settle these disputes between Government Departments and private enterprise. Perhaps the reply of the right hon. Gentleman was unfortunate. It rather suggested that out of

a carefully selected panel, selected by himself, if one particular case went against him, that that particular arbitrator would go on the black list.

Mr. E. J. Williams: May I interrupt the hon. Member?

Sir P. Harris: No, I should like to state the case in my own way. I think the Minister made a sensible proposal. The suggestion was that between now and Report stage we should consider whether we can devise a panel of arbitrators to select from, that they should elect their chairman and that the chairman should be charged with the duty of selecting an impartial arbitrator for the particular case which has to be decided. That was a constructive proposal, and I suggest that because it has not been received with enthusiasm he should not throw it over. He should stick to his original undertaking and consider whether he cannot draft words to meet the case.

6.13 p.m.

Mr. Bracken: I agree with the hon. and gallant Member for Epsom (Sir A. Southby) that the position at the moment is extremely unsatisfactory. The Minister, who is a lawyer, used these words:
 "I want to deal out rough business justice.
With his handpicked tribunal I feel certain that the right hon. Gentleman will deal out rough justice, but I do not know whether it will be justice. For the Minister, who is himself a lawyer, to say that he disregards the independent nominees appointed by the Lord Chancellor and other authorities, is a Napoleonic attitude; for him to say that he is going to deal out this rough business justice through the nominees he has selected is utterly unsatisfactory. I do not think that the Committee should wait until the Report stage; they should accept the Amendment. The Minister has been given reasoned arguments for its acceptance, but he has treated them with the greatest contempt. It is true that he has the support of the Socialist party opposite, who have given their explanation of his explanation and have made things even more confused. I hope my hon. Friends will persist in their proposal. I have never heard a lawyer in this House throw away the trappings of his profession so far as to say that rough business justice is better than the ordinary settled process of the law.

6.15 p.m.

Mr. Gallacher: I had not intended to intervene in this discussion, but one or two things have been said which demand an answer. Fully appreciating the idea of business justice that is held by the business men in the Committee, I can quite well understand their being terrified at the thought of the Minister using the words "rough business justice." When he hears such a remark, every one of those representing big business immediately feels that he is going to get a dose of his own medicine. One of these representatives of big business has suddenly discovered a warm-hearted desire to help the trade union movement. Is there any hon. Member who believes that the hon. and gallant Member for Epsom (Sir A. Southby) was sincere in his talk about the trade union movement? The hon. and gallant Member made a remark to the effect that somehow or other I have some antipathy towards the trade union movement. I have always been a loyal trade unionist, and I believe that if the trade union movement and the working-class movement were given the responsibility of organising supplies, that organisation would be carried out in the most effective manner.

Sir A. Southby: The hon. Member says that he supports the trade union movement. If that is the case, is it not a pity that the trade union movement will not support his political movement, the Communist movement?

Mr. Pritt: What has that got to do with it?

The Chairman (Sir Dennis Herbert): I do not think it has anything more to do with that than this discussion has to do with the Amendment.

Mr. Gallacher: It is no more germane to the Amendment than the opinions that have been expressed by hon. Members opposite. We are dealing with the position of the Minister in relation to the panel of arbitrators. The desire of those who support the Amendment is not to get independent arbitrators, but to get arbitrators who will represent and look after the interests of the Federation of British Industries. That is all they are concerned about. Reference has been made to the fact that the Minister is to be judge and jury in his own case. I have had some experience of judges and juries, but in this case, I am prepared

to give the maximum support to the Minister, on one condition. I will make him judge and jury —

Mr. Bracken: The hon. Member will be Under-Secretary before long.

Mr. Gallacher: —in these particular matters if he will give me one pledge, and that is that on the first opportunity he will put all the members of the Federation of British Industries where they belong—in jail.

6.18 p.m.

Sir I. Albery: After listening to the discussion, I cannot help feeling that it is a pity that those of us who are interested in this Clause did not accept the offer, which I understood the Minister made, to have an independent chairman. Without wishing in any way to exaggerate the reply which the Minister gave to my hon. Friend the Member for Colchester (Mr. O. Lewis), I am sure that my right hon. Friend must realise that a case can occur in which he may find himself in some difficulty in selecting these arbitrators, if that duty is to devolve entirely upon the Minister. As he himself admitted, it is not likely to occur, but in the event of an arbitrator giving a decision which was most unsatisfactory, the Minister would, perhaps not unnaturally, think that was not an arbitrator who could be selected again. Even without such an extreme case happening, I cannot help feeling that if the Minister really wishes the Clause to be administered with a full sense of justice, he will himself agree that in all circumstances it would be far better that the particular arbitrators who are to decide different cases should be chosen by an impartial and independent chairman. I very much hope that the Minister did himself have that idea, and as there is a very general feeling in many parts of the Committee that some such alteration is needed, I hope he will again repeat his offer to consider this,

6.20 p.m.

Mr. Ernest Evans: I want to ask the Minister to reconsider the statement he made, which I think was most unfortunate. He was asked the question whether, supposing that an arbitrator gave a decision against him and another case arose which involved very similar circumstances, the fact that the arbitrator had given a decision against him would induce him to appoint another arbitrator


on the next occasion. [HON. MEMBERS: "No."] I think we had better clear up this matter. As I understood the hon. Member for Colchester (Mr. O. Lewis), his question was as follows. Suppose that an arbitrator gave a decision against the Minister, and suppose that another case arose in which similar circumstances were involved— [Interruption] —would that induce the Minister, in the second case, to appoint another arbitrator? Would not there be a prejudice in the Minister's mind against appointing the same arbitrator on the second occasion? The Minister said, "Yes." the fact that the arbitrator had given a decision against me would induce me "

Mr. Burgin: I said nothing of the kind.

Mr. Evans: I am not the only one who was under that impression. As I understood the remarks of the hon. Member for Colchester, that was the precise question that he put to the Minister. It is there that my difficulty arises. I was alarmed by the Minister's statement that on the second occasion he would look for another arbitrator. If that is not what he meant, then I misunderstood him; and if it is what he meant, it is one of the most damaging statements I have ever heard.

6.23 p.m.

Mr. Burgin: As the statements I have made are in question, I had better indicate what I thought I said. As I understood it, the question was whether the same arbitrator would be appointed again in a similar dispute, and I said I thought not, meaning not that there was some prejudice, but that there was no assurance that you would appoint the same arbitrator again merely because the same point was in dispute. What I have been trying to say throughout is that you appoint a wide panel and you pick the right man for a particular case. There is no assurance that, because an arbitrator handles a dispute on a particular occasion, the same arbitrator will handle another dispute of the same kind. [Interruption.] Hon. Members can look up the Official Report when it appears. I was under the impression that the hon. Member for Colchester (Mr. O. Lewis) asked me expressly whether, if an arbitrator decided a particular case and decided in a way contrary to what the Minister had expected, the Minister would, in a similar case, appoint the same

arbitrator? I said "No." [Interruption.] Hon. Members misunderstand me. What I am getting at is that there is no argument for or against a particular arbitrator being appointed again. You select the arbitrator ad hoc each time, when a dispute comes, from a panel selected a long time before.

6.25 p.m.

Mr. Lewis: I do not want to claim to have "caught" the Minister in any way, for, after all, he has a difficult job in replying to all the points that are suddenly put to him; but I would like to call attention to what actually occurred. I put to him this specific case. If he appointed an arbitrator in a given case, and the arbitrator gave his decision and the Minister was profoundly dissatisfied with that decision, if another case occurred shortly afterwards of a similar character, would he appoint that arbitrator again? The Minister gave a perfectly natural and sensible answer—"No." Anyone in the Minister's position would give that answer and act in that way. The fact of the matter is that, in those circumstances, it means that the Minister would be in the position that, having chosen this judge in the first case and having disliked the justice he had given, the Minister would choose another judge in another case. That is what we want to prevent.

6.27 p.m.

Mr. E. J. Williams: In this matter, I think the Committee has to be very careful that it does not give to the country the impression that the attempt on the part of hon. Members opposite in forcing the Minister to give way is for the purpose of obtaining representation for certain vested interests. I have listened to the whole of the Debate this afternoon, and it would seem to me that the pressure from the other side of the Committee is for the purpose of protecting in the arbitration certain vested interests. I think the Minister is trying to meet this matter quite clearly. In making an offer to the Committee, which he repeated a number of limes—when a large number of hon. Members now present were absent—obviously he would have met the point put my the hon. Member for Colchester (Mr. O. Lewis), but the hon. Member for Colchester at that point was not prepared to accept the offer. It was very simple to put a hypothetical case, in the nature of a kind of


leading question to the Minister, in order to obtain from him the reply that was expected by the hon. Member for Colchester, apparently for the purpose of raising the heat that there has been in the Committee since. The Minister's reply was simple and straightforward. If a panel of persons are appointed as arbitrators in certain cases, one can never expect the same person to be appointed twice. No given person is appointed in perpetuity, even though the circumstances of the cases may seem to be similar. Obviously, from time to time, different persons are appointed from the panel, and the Minister was correct in his reply in that connection.
When I attempted to interrupt the hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris), he seemed to become very "shirty." Apparently he wanted to utter his words of wisdom, and was not prepared to accept an interruption. The point I wanted to put to him was whether he does not think that the Minister in this respect represents the public interest, and that being so, surely the Minister ought to be defended in a matter of this kind. There is no reason why the hon. Member for North Padding-ton (Mr. Bracken) should get heated on the subject. We are entering a sphere in which, for the first time, industry in this country is to be co-ordinated for a given purpose. For some months there has been a clamour for a Ministry of Supply. Now that a kind of enabling Bill has been initiated for the purpose of setting up an effective Ministry of Supply, the representatives of certain interests are endeavouring to obtain representation for those interests in connection with decisions which may have to be taken from time to time. I hope the Committee will accept the view put forward by the Minister. He is prepared to reconsider the matter before the Report stage. [Hon. Members: "No!"] If the Committee press him I think he would be prepared to do so, but no pressure has been brought upon him to do so. As far as we are concerned, we think the Minister is right in the stand which he has taken and I hope he will adhere to the terms of his original statement on this matter. I think it right that the Minister should have the power of selection in this case. Some of us on this side have had a great deal of experience

in these matters. I could weary the Committee with instances from my own experience in the mining industry. During the last 25 years I have been involved in many problems arising out of arbitration and the hon. Member for North Paddington, who may know very little about these matters, must realise that during the last 25 years, to my personal knowledge, the miners have always had meted out to them what is called rough justice.

Mr. Bracken: Since the hon. Member himself has interrupted, may I interrupt the high tributes which he is paying to himself and his colleagues, in speaking of their experience in. these matters to say that I am objecting to the use of the words "rough business justice." I think the justice of the courts would be preferable.

Mr. Williams: I am sure that the Minister's reference to "rough business justice," meant that he did not want judicial justice, in the sense that there are certain factors entering into these matters which could not be denied in a court of law without an enormous waste of time. Arbitrators, as such, would have to exercise not only judicial functions but a great amount of common sense in dealing with all the issues involved. I think that is the correct interpretation of the Minister's statement. As I say, for years the miners have always had rough justice meted out to them and it has been very rough justice indeed in many cases. We have had experience of all kinds of arbitrations and I feel sure that in this case the Minister will be doing the right thing in retaining the appointment of arbitrators.

6.33 p.m.

Sir Annesley Somerville: Hon. Members opposite have accused hon. Members on this side of being anxious to obtain representation for vested interests. It is not so. What we want is not merely rough justice, but justice, or at any rate the best opportunity of obtaining justice, and what we object to is that the Minister who is the chiefly interested party should appoint his own judge. I suggest that my right hon. Friend would be wise to reconsider this point. It will be a standing reproach in connection with this Bill, if the Minister should deliberately attempt to force through the Committee a provision giving him power to appoint his own judge.

6.34 p.m.

Mr. Burgin: May I mention one reason which has perhaps escaped the attention of the Committee, why it might be wise to leave the power of appointment of arbitrators in the hands of the Minister? I am only doing this because I believe it to be in the interests of the Committee to bring forward every relevant point. If arbitrators were nominated by outside bodies, by distinguished judges, by the Lord Chancellor, or by the presidents of learned societies, those nominees would be free from any effective criticism in the House of Commons, whereas if the Minister responsible for carrying this Measure through, nominates the arbitrators, the matter can be raised on the Floor of the House. I also think it fair to tell the Committee that the type of tribunal which is proposed has been referred to the Prime Minister's Industrial Panel and meets with their approval in preference to the sort of tribunal which is suggested in the Amendment. I apologise if I made a mistake in the use of the words "rough business justice" but I simply meant justice as between business interests, without too much legalistic argument.

Sir A. Gridley: I am anxious to help the Committee to get on with the consideration of the Bill, but I wish to put two questions to the Minister. The first is this. Suppose the Minister asks a firm to carry out a certain contract and the firm say that they require an arbitration clause, providing that in case any dispute should ultimately develop and the parties cannot agree upon an arbitrator, that the arbitrator should be selected, say, by the President of the Institute of Civil Engineers. Would the Minister turn down that offer? My second question is this. In moving the Amendment I referred to the question of costs. I would like to know what the Minister has to say upon the observations which I then made. After the Minister has replied to those questions, I propose, with the concurrence of my hon. Friend, to accept the offer which he has made, and perhaps it will be possible to agree between now and the Report stage upon how the Clause should be amended.

Mr. Burgin: I am asked a hypothetical question. I am asked how I should deal with a contracting firm who made it a

term of their acceptance of a contract that they would require the insertion of a particular arbitration clause. Under Clause 7 of the Bill it will not lie with the contractor to require the insertion of any clause. I think, therefore, the question is unlikely to arise. I can conceive cases in which you might hasten the supply of certain articles—and that is the prime reason for the Bill—by having the power to deal with disputes in such a way as was mutually agreed between the contractor and the Government but it is all hypothetical. The costs question is a minor one. Costs are always in the discretion of the tribunal itself and are dealt with as part of the matter to be decided. It is not necessary to insert either a reference to the Arbitration Act or an indication to the arbitrators as to how they are to carry out their functions. Once the issue in dispute is delegated to the arbitrators every matter pertinent to the dispute, including payment for stamps, and costs, and fees and so forth will be relegated to them. I think it would be found that their decision covered the question of costs.
The hon. Member said that, subject to the answers which I gave on these points, he would consider withdrawing the Amendment with a view to consideration between now and the Report stage. I do not wish to mislead the Committee. The suggestion of allowing the panel to appoint a chairman or deputy-chairman and of leaving it to the chairman or deputy-chairman to select members from the penal for each case of arbitration, was made in order to see whether it met with general acceptance. I think the result which is desired by the majority of the Committee- will be achieved by adhering to the Clause. [Hon. Members: "Oh!"] Let me say why I think that is so. A similar result is arrived at if the arbitrator is selected by the Minister as if he is selected by the chairman who is himself appointed by the Minister, and I think it will be found that the Clause, as it appears in the Bill, is the right procedure.

Sir P. Harris: Does the right hon. Gentleman then withdraw his offer? I thought it was a reasonable offer and a number of Members of the Committee were prepared to accept it.

Mr. Burgin: No, I am not withdrawing any offer. I am explaining what the


offer was. My offer was made in the hope that it might meet with general acceptance but when we find that it does not, then I think it is better to keep to the Clause as it is in the Bill. I have pointed out why the Clause in the Bill and the offer are so closely alike. If, as the hon. Member said, the chairman is to be selected on a suggestion from the Minister, then the Minister might as well make the appointment of the chairman to start with. I think, therefore, in the light of the discussion that has taken place that we should adhere to the Clause. We have had a very fair interchange of views and I am very well seized of what the Committee desires. I think that, broadly, the sense of the Committee is in favour of a panel of arbitrators picked from men who are experienced in the industries and trades likely to be concerned in arbitrations. I think there is so little difference between the selection of the particular arbitrator being made by the Minister himself and being made by the chairman whose original appointment had been made by the Minister, that I should recommend the Committee to keep to the Bill as it stands.

Mr. Pickthorn: There is one question which has not yet been asked, perhaps because the answer is known to everybody else though it is not clear to me. The Minister's argument just now was that the Minister would be responsible and would be known to be responsible for the selection of the panel. If the Clause goes through as it stands, will the composition of the panel be publicly known from the first?

Mr. Burgin: The hon. Member says "from the first." Obviously the Royal Assent must first be given to the Bill; then there must be nomination of the panel, and I should hope that by means of question and answer in the House of Commons it would be possible to give the. constitution of the panel. If the appointment is made by the Minister, then at Question Time, or on any occasion when the Ministry Vote is down for discussion in Committee of Supply, or on Motions for the Adjournment, there will be opportunities of discussing any appointment made by the Minister which is regarded as unsatisfactory; and the Minister will be responsible to this House.

6.42 p.m.

Mr. Thorneycroft: It may be plain to everybody else but I do not understand whether the Minister's offer stands, or whether it has been withdrawn. When the Minister put forward that offer I was one of those who thought it an extremely fair solution of the problem. It might not, I thought, be satisfactory to all, but clearly it indicated that a man elected by the other arbitrators themselves, who was not concerned about which, way any particular decision went, would select the arbitrators in other cases. Speaking for myself, I am prepared to vote with the Government if that offer still stands, and I hope that my hon. Friends here will accept that offer. On the other hand, if the offer is withdrawn, I want to make my position perfectly plain. It is that I should vote against the Government and I believe that the vast majority of the Committee would do the same.

Mr. Burgin: I am asked whether my offer stands or whether it has been withdrawn. The offer was, as I say, made in order to see whether it met with general acceptance. I do not think it does. [Hon. Members: "Yes."] I do not think there is such generality of acceptance as was intended by me, and I propose, therefore, to ask the Committee to deal with the Clause as it stands.

6.44 p.m.

Sir A. Southby: I understand that my right hon. Friend has now definitely withdrawn his offer on the ground that it does not meet with general acceptance in the Committee. Speaking for myself although I do not like the constitution of this panel, for the reasons which I have already given to the Committee, I am prepared to accept the offer as I understood the Minister to make it. I think my right hon. Friend owes it to the Committee to make plain whether he does or does not stand by that offer. 1 certainly understood his offer plainly, and I thought it met with acceptance on all sides of the Committee.

Hon. Members: No!

6.45 p.m.

Mr. Austin Hopkinson: I hope the Committee will not let this important point pass. The whole basis of our judicial system is that we appoint judges who cannot be dismissed by the Execu-


tive. The Minister now wishes to arrogate to himself a power which Parliament has refused for generations to allow in the case of the judicature. In other words, the Minister suggests that if he does not like the decision of a judicial person he shall be at liberty to make arrangements by which that man shall never function again. It seems to me that this is not a mere Committee point in the ordinary sense of the word; it is one which Parliament would be failing in its bounden duty if it allowed it to pass. After all, the Minister is not immortal. We might get in his place a Minister who does not command that universal confidence which we feel in the present Minister of Supply, and Parliament must always remember the possibility of such an event in the future. No doubt it is very suitable that the present Minister should have this power, a power unknown to our Constitution for generations, but, as I say, there may be other Ministers to whom even this Committee, even those hon. Members above the Gangway, would not be willing to entrust such supreme power.

Sir I. Albery: I must express my great disappointment with the attitude which the Minister has taken up upon this matter. I cannot help feeling that throughout the whole of this discussion he- has been more inclined to say what it is his intention to do in certain events than to confine his remarks to the merits or the demerits of the Amendment. When he declares what it is his intention to do on a particular Amendment there is no fault to find with his intentions; they are entirely admirable, and we all of us have

great regard for him and his ability. We have no doubt that he will be able to administer the Bill in accordance with his intentions and, no doubt, with justice. But that is not the way in which it appears to me a Member of Parliament should regard legislation. We are concerned with the merits of the case, and not with the particular Minister who may be called upon to administer this legislation. We have had the offer which the Minister made and appears since to have withdrawn. I do not think that he has advanced any valid argument against sticking to the offer which he made to the Committee. He certainly has not put up any argument to show that it would not work, or that it was undesirable. His main argument appears to have been based on the assumption that a majority of this Committee will support him if he sticks to the position lie has now taken up. That in itself is not, to my mind, a suitable argument to address to this Committee, and is a still less suitable argument to address to Members of his own party who have loyally supported the Government; and, for my part, if I am to be put in the position of voting against the Government I wish it to be clearly understood that I do it with great regret, and I am more than a little astonished that the right hon. Gentleman should take upon himself the quite unnecessary responsibility of putting us in that position.

Question put, "That the; words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 278; Noes, 33.

Division No. 184.]
AYES.
[6.50 p.m.


Adams, D. (Consett)
Braithwaite, Major A. N. (Buckrose)
Cobb, Captain E. C. (Preston)


Adams, D. M. (Poplar, S.)
Braithwaite, J. Gurney (Holderness)
Cocks, F. S.


Adams, S. V. T. (Leeds, W.)
Briscoe, Capt. R. G.
Collindridge, F.


Adamson, Jennie L. (Dartford)
Broad, F. A.
Conant, Captain R. J. E.


Adamson, W. M.
Broadbridge, Sir G. T.
Cook, Sir T. R. A. M. (Norfolk N.)


Alexander, Rt. Hon. A. V. (H'lsbr.)
Bromfield, W.
Cooke, J. D. (Hammersmith, S.)


Allen, Col. J. Sandeman (B'knhead)
Brooke, H. (Lewisham, W.)
Cooper, Rt. Hon. T. M. (E'burgh, W.)


Allen, Lt.-Col. Sir W. J. (Armagh)
Brown, Brig.-Gen. H. C. (Newbury)
Cove, W. G.


Ammon, C. G,
Browne, A. C. (Belfast, W.)
Cox, H. B. Trevor


Anderson, F. (Whitehaven)
Buchanan, G.
Crooke, Sir J. Smedley


Aske, Sir R. W.
Bull, B. B.
Crookshank, Capt. Rt. Hon. H. F. C.


Balniel, Lord
Burgin, Rt. Hon. E. L.
Cross, R. H.


Banfield, J. W.
Burke, W. A.
Culverwell, C. T.


Beaumont, H. (Batley)
Butcher, H. W.
Daggar, G.


Beaumont, Hon. R. E. B. (Portsm'h)
Campbell, Sir E. T.
Dalton, H.


Benn, Rt. Hon. W. W.
Cape, T.
Davies, C. (Montgomery)


Benson, G.
Cayzer, Sir C. W. (City of Chester)
Davies, S. O. (Merthyr)


Blair, Sir R.
Chamberlain, Rt. Hn. N. (Edgb't'n)
Day, H.


Boothby, R. J. G.
Chapman, Sir S. (Edinburgh, S.)
De Chair, S. S.


Boulton, W. W.
Clarke, Colonel R. S. (E. Grinstead)
Denman, Hon. R. D.


Boyce, H. Leslie
Cluse, W. S.
Denville, Alfred




Despencer-Robertson, Major J. A. F.
Kerr, Colonel C. I. (Montrose)
Rosbotham, Sir T.


Dobbie, W.
Kerr, Sir J. Graham (Scottish Univ.)
Ross Taylor, W. (Wood bridge)


Dodd, J. S.
Kimball, L.
Rowlands, G.


Drewe, C.
Kirby, B. V.
Royds, Admiral Sir P. M. R.


Dugdale, Captain T. L.
Kirkwood, D.
Ruggles-Brise, Colonel Sir E. A.


Duncan, J. A. L.
Knox, Major-General Sir A. W. F.
Russell, Sir Alexander


Dunglass, Lord
Lamb, Sir J. Q.
Salmon, Sir I.


Dunn, E. (Rother Valley)
Lambert, Rt. Hon. G.
Samuel, M. R. A.


Eastwood, J. F.
Lansbury, Rt. Hon. G.
Sandeman, Sir N. S.


Eden, Rt. Hon. A.
Lathan, G.
Sanders, W. S.


Edmondson, Major Sir J.
Lawson, J. J.
Sanderson, Sir F. B.


Edwards, A. (Middlesbrough E.)
Leach, W.
Sexton, T. M.


Edwards, Sir C. (Bedwellty)
Lee, F.
Shepperson, Sir E. W.


Ellis, Sir G.
Leech, Sir J. W.
Shinwell, E.


Entwistle, Sir C. F.
Lees-Jones, J.
Shute, Colonel Sir J. J.


Errington, E.
Leonard, W.
Simon, Rt. Hon. Sir J. A.


Everard, Sir William Lindsay
Levy, T.
Simpson, F. B.


Fildes, Sir H.
Liddall, W. S.
Sloan, A.


Findlay, Sir E.
Lloyd, G. W.
Smith, Ben (Rotherhithe)


Fleming, E. L.
Loftus, P. C.
Smith, E. (Stoke)


Frankel, D.
Lunn, W.
Smith, Rt. Hon. H. B. Lees- (K'ly)


Fremantle, Sir F. E.
Macdonald, G. (Ince)
Smith, T. (Normanton)


Furness, S. N.
MacDonald, Sir Murdoch (Inverness)
Smithers, Sir W.


Gardner, B. W.
McEntee, V. La T.
Somervell, Rt. Hon. Sir Donald


Garro Jones, G. M.
McEwen, Cast. J. H. F.
Sorensen, R. W.


Gilmour, Lt.-Col. Rt. Hon. Sir J.
McGhee, H. G.
Stanley, Rt. Hon. Oliver (W'm'l'd)


Gledhill, G.
McKie, J. H.
Stephen, C.


Gower, Sir R. V.
Maclay, Hon. J. P.
Stewart, J. Henderson (Fife, E.)


Graham, D. M. (Hamilton)
Maclean, N.
Stewart: W. J. (H'ght'n-le-Sp'ng)


Grant-Ferris, Flight-Lieutenant R.
Maitland, Sir Adam
Stokes, R. R.


Green, W. H. (Deptford)
Mander, G. le M.
Storey, S.


Greenwood, Rt. Hon. A.
Margesson, Cap). Rt. Hon. H. D. R.
Strauss, G. R. (Lambeth, N.)


Grenfell, D. R.
Markham, S. F.
Stuart, Rt. Hon. J. (Moray and Nairn)


Gretton, Col. Rt. Hon. J.
Marshall, F.
Sueter, Rear-Admiral Sir M. F.


Griffiths, G. A. (Hemsworth)
Mason, Lt.-Col. Hon. G. K. M.
Summerskill, Dr. Edith


Griffiths, J. (Llanelly)
Mathers, G.
Tasker, Sir R. I


Grimston, R. V.
Maxton, J.
Taylor, R. J. (Morpeth)


Groves, T. E.
Messer, F.
Thorne, W.


Guest, Lieut.-Colonel H. (Drake)
Montague, F.
Thornton-Kemsley, C. N.


Guinness, T. L. E. B.
Moore, Lieut.-Colonel Sir T. C. R.
Tinker, J. J.


Hacking, Rt. Hon. Sir D. H.
Morgan, R. H. (Worcester, Stourbridge)
Titchfield, Marquess of


Hall. G. H. (Aberdare)
Morris, O. T. (Cardiff, E.)
Touche, G. C.


Hall, J. H. (Whitechapel)
Morris-Jones, Sir Henry
Tree, A, R. L. F.


Hambro, A. V.
Morrison, G. A. (Scottish Univ's)
Tufnell, Lieut.-Commander R. L.


Hammersley, S. S.
Morrison, Rt. Hon. H. (Hackney, S.)
Turton, R. H.


Hannah, I. C.
Morrison, Rt. Hon. W. S. (Cirencester)
Wakefield, W. W.


Hayday, A.
Naylor, T. E.
Walkden, A. G.


Heilgers, Captain F. F. A.
Neven-Spence, Major B. H. H.
Walker, J.


Henderson, A. (Kingswinford)
Oliver, G. H.
Ward, Lieut.-Col. Sir A. L. (Hull)


Henderson, J. (Ardwick)
Orr-Ewing, I. L.
Ward, Irene M. B. (Wallsend)


Henderson, T. (Tradeston)
Paling, W.
Wardlaw-Milne, Sir J. S.


Heneage, Lieut.-Colonel A. P.
Palmer, G. E. H.
Waterhouse, Captain C.


Hepburn, P. G. T. Buchan-
Parker, J.
Watkins, F. C.


Herbert, Lt.-Col. J. A. (Monmouth)
Parkinson, J. A.
Watson, W. McL.


Higgs, W. F.
Pethick-Lawrence, Rt. Hon. F. W.
Wedderburn, H. J. S.


Hills, A. (Pontefract)
Pilkington, R.
Welsh, J. C.


Hoare, Rt. Hon. Sir S.
Poole, C. C.
Westwood, J.


Holdsworth, H.
Price, M. P.
Whiteley, Major J. P. (Buckingham)


Holmes, J. S.
Quibell, D. J. K.
Wickham, Lt.-Col. E. T. R.


Hopkin, D.
Radford, E. A.
Williams, E. J. (Ogmore)


Hore-Belisha, Rt. Hon. L.
Ramsay, Captain A. H. M.
Williams, T. (Don Valley)


Hudson, Capt. A. U. M. (Hack., N.)
Rankin, Sir R.
Wilson, G. H. (Attercliffe)


Hudson, Rt. Hon. R. S. (Southport)
Rathbone, J. R. (Bodmin)
Windsor, W. (Hull, C.)


Hunter, T.
Reed, A. C. (Exeter)
Winterton, Rt. Hon. Earl


James, Wing-Commander A. W. H.
Reed, Sir H. S. (Aylesbury)
Womersley, Sir W. J.


Jenkins, A. (Pontypool)
Reid, J. S. C. (Hillhead)
Wood, Rt. Hon. Sir Kingsley


Jenkins, Sir W. (Neath)
Reid, W. Allan (Derby)
Woods, G. S. (Finsbury)


Joel, D. J. B.
Remer, J. R.
Wragg, H.


John, W.
Richards, R. (Wrexham)
Young, Sir R. (Newton)


Jones, A. C. (Shipley)
Ridley, G.



Jones, Sir G. W. H. (S'k N'w'gt'n)
Riley, B.
TELLERS FOR THE AYES.—


Jones, L. (Swansea W.)
Ritson, J.
Mr. Munro and Lieut.-Colonel


Kennedy, Rt. Hon. T.
Robinson, W. A. (St. Helens)
Harvie Watt.




NOES.


Acland, Sir R. T. D.
Griffith, F. Kingsley (M'ddl'sbro, W.)
Mellor,Sir J. S. P. (Tamworth)


Acland-Troyte, Lt.-Col. G. J.
Harvey, T. E. (Eng. Univ's.)
Moreing, A. C.


Balfour, G. (Hampstead)
Hopkinson, A.
Owen, Major G.


Bracken, B.
Hutchison, G. C.
Perkins, W. R. D.


Courtauld, Major J. S.
Jones, Sir H. Haydn (Merioneth)
Pickthorn, K. W. M.


Evans, D. O. (Cardigan)
Lewis, O.
Roberts W. (Cumberland, N.)


Evans, E. (Univ. of Wales)
Lyons, A. M.
Silkin, I..


Gridley, Sir A. B.
Macdonald, Capt. P. (Isle of Wight)
Simmonds, O. E.







Somerville, Sir A. A. (Windsor)
Thorneycroft, G. E. P.
TELLERS FOR THE NOES.—


Southby, Commander Sir A. R. J.
Wayland, Sir W. A.
Mr. Hely-Hutchinson and Sir Irving Albery.


Spent, W. P.
While, H. Graham



Tate, Mavis C.
Wright, Wing-commander J. A. C.



Question put, and agreed to.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

7.1 p.m.

Mr. H. Morrison: Before this Clause is passed there is one matter of administration that I would like to raise with the Minister. The Committee may remember that when the Prime Minister announced the intention of the Government to set up a Ministry of Supply there were various questions put to the Prime Minister, and I myself put one as to whether the Bill would include within its scope powers to the Minister to purchase, on behalf of the State Department concerned, supplies for Civil Defence. The Committee will know that there have been difficulties in respect of certain supplies, notably fire brigade appliances, and the Prime Minister said that he would take that point into consideration. I think what I suggested would, subject to Orders-in-Council, be legally possible under the Bill.
But there is another point on the other side of the picture to which I wish to draw the Minister's attention. This Clause confers upon the Minister, I think rightly, very considerable powers of requiring the industry of the country to be of service to the State, owing to the necessity of securing military and other equipment in the public interest. What I would like from the Minister is an assurance that he will take into account, in making requirements upon industry, the needs of the local authorities, and of the Lord Privy Seal for certain goods and services in relation to Civil Defence, which, indeed, should be part of the purpose of this Bill. It would be unfortunate if the requirements of the State in the active branches of Defence served to prevent supplies being delivered to the local authorities in respect of Civil Defence. Apart from that, there are certain supplies which are urgently needed for the normal and essential services of local government, and while I agree that the Minister cannot be expected to go too far in that field, I should be glad if he would give an undertaking that, while he cannot promise matters of detail within the sphere of normal local government services, he would take into account the needs of local

government services where they are vitally necessary in the public interest.
I would ask him to go further in the field of supplies needed by local authorities for Civil Defence itself. That, of course, goes pretty far—for example, coal for the main drainage service, which will be necessary in time of war, medical supplies for the hospitals, and food for inmates and staffs of institutions. I may say that at the request of the Minister of Health the London County Council lent the services of the chief officer of supplies to purchase nearly £1,000,000 worth of supplies for hospitals and medical needs; and, therefore, the Minister will see that there are times when we are not only acting for the council but we are actually acting for the State. I am sure that local authorities generally, both in other pans of the country and in London, would wish the Minister to make some sympathetic statement that, in making these interventions in industry, requiring it to serve the needs of the State in a military sense, he will give full understanding to the needs of local authorities in the field of Civil Defence, and, so far as possible, in other essential spheres of local government administration.

7.5 p.m.

Mr. Simmonds: I would like to raise briefly a point on Sub-section (7). In that Sub-section the Bill gives cover to a contractor or other person who has failed to meet his liabilities to some third party in this country, and he is covered against being sued for default on account of the obligations which the Minister has placed upon him. It would seem to me that the Minister here has given no power to free this contractor upon whom he has placed these liabilities, from the liability of being sued in a foreign court. I would like to ask whether he has considered this point, and does he foresee quite clearly that he will cover any contractor who gets a judgment in a foreign court because this contractor has failed to meet his liabilities to some foreign citizen or foreign corporation?

7.7 p.m.

Mr. Harold Macmillan: Before the Committee parts with this Clause, which is, I think, the vital clause of Part 2,


just as Clause 2 was the vital clause of Part I, perhaps I might be allowed to ask one or two questions of my right hon. Friend and to put one or two considerations to the Committee. In the previous discussion I pointed out on Clause 2 that, important as were the powers and duties that were now being entrusted to the Minister with regard to the organisation of supplies, equally important was the choice of what not to produce, as well as what to produce; and he referred me then to subsequent Clauses of the Bill, which of course I have studied. This really is the Clause, as I understand it, which gives him these powers to take over a business or industry or plant and to adapt it to the production of supplies that he requires, and, of course, it was this Clause that he had in mind.
It is clear that under Sub-section (3) a business which, in the opinion of the Minister, "is suitable for or can be adapted to producing or dealing in such articles" can be taken over. But may I follow out further what happens if that is done? What are the secondary results? Suppose, for instance, that a plant which makes printing machinery or gramophones is suitable for and can be adapted under the Sub-section for the manufacture of certain necessary supplies for the Services. The Minister has power under this Clause to take over this business, or this part of the business. But very important secondary results immediately follow. For example, assume that he takes over a large part of the gramophone plant, and adapts it to the production of munitions of war.
A first secondary result is that, if the demand for gramophones remains constant, the price of gramophones will rise, because you will have an equal demand and a smaller supply. Therefore, the taking over of this gramophone factory will mean that all the other gramophone factories will become more profitable, and therefore they will increase their production, and will begin to offer a higher price for labour and material, in order to increase their production. The only method by which the labour and materials can be re-directed into supply of those particular things which we need is by offering a still higher price for this labour and material, to direct them back again into the business of munitions. In other words, if the only method is merely to take over part of an industry and adapt

it for munition purposes, without other powers to the Ministry, there is a real danger of setting up a series of events which will lead to a grave inflation of the whole price system; because there will be offered a more attractive and profitable employment, and the only method of getting the labour and material back again will be still further to raise the price, and thus you have produced again the inflationary spiral which we had in the War, and from which we have been suffering almost ever since.
I observe, also, that this power in this Clause is limited to businesses. The word "business" is slightly difficult, and I would like to ask whether it means an enterprise in the sense of a partnership or company, or one particular plant or one particular factory—because there is an essential difference between the two. You have, of course, no power to take over the workers, whom you may require more than the factories. You cannot direct the workers in a particular enterprise, rather than take the factory itself, which may not easily be conducted without them. Of course you might do that with some powers which are not in this Bill. Therefore, I still think that the Minister of Supply will sooner or later be forced to an alternative method.
Suppose that it were desirable to direct the same labour and skill and plant which are now employed in making motor cars or gramophones into making these particular kinds of supplies for military preparations, an alternative method of taking over one particular factory or business would be much more desirable. It would be to get the industry together to agree a limitation of the profits, and to have an agreed system throughout the industry, by which the production of motor cars or gramophones could be cut to perhaps 70 per cent. or 60 per cent. of the previous year's production, and, by an agreed scheme throughout the industry, the plant, labour and skill would be made available for the production of those supplies. I believe that, in effect, would be the only satisfactory way of proceeding, without setting up these undesirable secondary results over the whole economic field, which, if one particular business out of a number, or one particular part, is taken over, would be the obvious result on the competitive power and profit-making power of those which


remain, in a market which is constant, and which may even rise through the general rise in the level of employment which is likely to come about as the result of this immense expenditure of money over the whole field.
I raise this point because I do not know whether the Minister will give some serious attention to it, to see whether he will require greater powers. It is one which I know is discussed and seriously considered by many people who are studying, not only the first problem with which this Bill and this Clause immediately deals—the immediate first problem of getting these essential supplies for the fighting forces—but also studying the problem of getting them under conditions which have the least injurious effects on the whole working of the economic system, and which set up the least harmful results over other parts of our social and economic structure. I have ventured before to use the phrase that our economic system is indivisible. You cannot just take the supply of munitions of war and do a lot of things with that without immense reactions upon the rest, and I do think that where you have a great industry, and particularly an industry which may be very suitable for changing its production, it will be far better to have an agreed scheme such as I have suggested.
Take an industry in which I am engaged, the production of printing machines. If that industry is directed in part of its capacity to the output of munitions, it can make its own scheme on a fair basis, without setting up all the results of an unorganised interruption of the ordinary economic life of the industry. I believe that that is the only ultimate way in which you will be able to control profits; because, as long as profits are related to prices—and they must be, if you do it in the cruder way that is suggested in this Clause—you will automatically produce the effect of increasing prices, and therefore you will be faced with the real problem of this whole question, that you are always tackling profits after they are made, instead of before, rather than controlling and preventing the undue inflation of the price level, which is the real way to deal with the problem of profits.
I have ventured to put these considerations before the Committee. Perhaps they

are dull and take our mind back to matters more serious and of greater initial importance than some of the things which we have been discussing, but I would ask the Minister whether he would require larger powers, and if he does, whether he would consider the matter before the Report stage, in order to attack the problem in the way I have suggested. If he can do it without adding to his legislative powers I suggest he might consider that approach to the great industries of the country. His problem is in some ways easier than was that of his predecessor in 1915, because, at that time, British industry was far less integrated and organised into units than it is to-day. It is much easier now to approach them and to make a definite suggestion.
I am differing upon occasional details, but I realise the vast tasks which are before the right hon. Gentleman. He has a double task, of which he may achieve one, but the other task is parallel with it, and I am sure is always in the right hon. Gentleman's mind; it is, to carry out the programme with the minimum of dislocation and bringing good and not ill to the structure of our social and economic organism. I would ask the right hon. Gentleman to consider the matter from that point of view. I have made, I hope, some contribution to what seems to me the over-riding problem of the present day. It is more difficult than if we were at war when, if we made a mistake, we could clear it up; but in this twilight which is half peace and half war the problem is more difficult than in any other situation. Perhaps my right hon. Friend might be able to do a very great service if he could help to solve many of the questions to which I have referred and which are troubling many people who are looking beyond the immediate present.

7.18 p.m.

Sir Arthur Salter: In a very few words I wish to support the argument of my hon. Friend the Member for Stockton-on-Tees (Mr. Harold Macmillan). He developed much more adequately and fully a general point to which I briefly referred in the Second Reading Debate. This is that while the Bill, and particularly this Clause, gives adequate power to the Government to get the things they want themselves, it does not give adequate power, and certainly the policy indicated does not suggest that the Government are considering with a view


to taking adequate steps, to deal with the secondary consequences of what the Government are doing in obtaining their own direct supplies.
That would be all very well if what the Government wanted were of such a limited scale as not to have any repercussions on the general economic system, but when the scale of the Government's actions for defence purposes is greatly enlarged, very wide and deep repercussions will take place throughout the whole economic system. You cannot inject into an economic system so great a demand for so many necessities without profoundly affecting what is happening in spheres in which you are not directly interested. I do not see any indication that those secondary consequences will be adequately dealt with under these proposals. If definite action is not taken by the Government to control and limit production in directions where it is not immediately wanted to meet the Government's demands, a patchy inflation will be created which will distort the general price structure of the economic system. I venture to press upon the Minister the point of view put forward by my hon. Friend.

7.21 p.m.

Mr. Burgin: I hope that the Committee will feel disposed to give me the Clause when I have replied to some of the points which have been put forward. The right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) asked me for an assurance as to the way in which the powers conferred by the Bill will be exercised in relation to contractors supplying the needs of Civil Defence and the requirements, in certain circumstances, of local authorities. It is not possible to give a concrete assurance that no difficulty of that kind will ever arise, but, in fairness, the Ministry will do all it can to prevent such a concrete case and to settle it reasonably and equitably if it should arise. The local authorities and the contractors will find the Ministry very ready to co-operate in seeing that essential services are never interrupted, except in the last resort. National need I suppose must take precedence over local-government need. In peace time there ought never to be any clash. I hope that the right hon. Gentleman, although I have got into trouble for giving assurances in Committee as to cer

tain matters, will now accept my assurance that as far as lies in our power we have no wish, in administering these powers, to interfere with the supplies to local authorities in a way that will prevent essential services being provided; still less to interfere with Civil Defence, passive, active, or whatever it may be.
My hon. Friend the Member for Duddeston (Mr. Simmonds) asked whether under Sub-section (7) a contractor was protected if he had assets in a foreign country and failed to deliver, under a contract in that foreign country, and who was condemned by the courts in that country under a judgment which could be executed against the assets in that foreign country. He is not so protected. No protection of mine can operate outside the three-mile limit. It follows that I cannot provide complete protection by a defence which may be applied in a foreign court of law. No doubt any manufacturer who suffered in that way might be able to claim some form of compensation under whatever war legislation permitted him to do so.
My hon. Friends the Members for Stockton-on-Tees (Mr. Harold Macmillan) and Oxford University (Sir A. Salter) raised points which I do not think really depend on me. The first point related to an appreciation of the problem and of the method of administration adopted. I hope that the Committee will understand that the Bill is being brought forward in peace time before any Defence of the Realm Regulations exist. When I compare any particular Clause in the Bill with its historical parallel I have to make the necessary allowance for the fact that in 1915 D.O.R.A. had already been passed and was the law of the land, and that tremendous powers had been given, such as those for the control of labour, the regulation of prices, and of movements of individuals from one factory to another, and a dozen-and-one different powers which are impossible at the present time. My hon. Friend the Member for Stockton-on-Tees called the present condition of affairs a twilight; it is indeed not peace or war, but a twilight. It may be that in a time of emergency very different powers would have to be asked for, and that there would come to the Government as a whole, by a Defence of the Realm Measure, an immense number of heterogeneous powers which, pieced together,


would operate throughout the duration of the war.
I think I can satisfy hon. Members that the problem is realised and can give them some indication of the way in which I intend to deal with it. I am sorry to include this personal note, but it is the most convenient way of conveying a point of view. The idea that you ought not to disrupt industry by expecting it suddenly to produce a number of munitions and other things, meaning by that everything that is required by the public service, without having some regard to what may be called secondary consequences is of course, correct. We might achieve our purpose by talking to the industry as a whole or to the Federation of British Industries, the Industrial Panel or the Association of Chambers of Commerce, which deal with a group of industries rather than with individual firms. It is attractive that, instead of taking over one motor car works and making shells in that works, you should group together the total motor-car production of the country and say: "We think that motor-car production should come down from 100 per cent. to 65 per cent.; how best can that 35 per cent. be utilised?" It is common sense and it would lead to greater supply more quickly.
A question was put to me by hon. Members opposite whether I would say that, under the powers in Sub-section (7), there would be something in the nature of injustice done to individual firms and that one was not going to find its ordinary machinery in full use while another was carrying on in its peace-time fashion. Industry is a live organism and it must be dealt with with that in mind. I am very much alive to the benefit, in framing my Orders-in-Council, of having the advice of organised industry. I agree that the position is much simpler than it was in 1915. Immense steps have been taken to organise industry, and although there are some woeful blanks where, instead of dealing with an organised body, one has to deal with a large number of individual proprietors, I wish to utilise organised industry and its spokesmen to an extent and in a way which may be decisive. If the work can be done with some portion only of the industry, by devoting the whole output of that portion to defence I cannot think of anything which would

be quicker to obtain the supply that we need. I hope that hon. Members will be satisfied with that explanation of my credo and that I have, to some extent, met the points which have been raised: and that the Clause might now be added to the Bill.

CLAUSE 8.—(Power to require storage.)

7.28 p.m.

Mr. Simmonds: I beg to move, in page 9, line 21, after "the," to insert "anticipated or."
The effect of the Amendment is that any person having storage space may claim that he requires certain accommodation for his normal business. The Minister will then not be able to call upon him to place that storage space at the disposal of the Ministry. We can foresee the immense worry of somebody who owns storage space, and has made provision for some definite obligation in the future by constructing additional barns, granaries or warehouses, and we feel that the Minister ought to be under an obligation to take into consideration the fact that those new warehouses have been constructed for a definite purpose. I sincerely hope that my right hon. Friend will be able to accept the Amendment.

7.30 p.m.

Mr. Burgin: I think I can help my hon. Friend by telling him that his Amendment is not necessary and that the words "normal business" will cover everything that it is necessary to cover. What it will not cover is somebody who keeps storage space in the odd hope that some business may turn up at some time. Such a case as the hon. Member mentioned, that of a man who had storage for a definite contractual obligation, or who had reached the firm resolution to engage in a particular business and had made his decision, that is already covered, and it is not necessary for additional words to be put in to cover it.

Mr. Simmonds: In view of the assurance given by my right hon. Friend, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

CLAUSE 9.—(Power to require production of documents and keeping of records.)

7.31 p.m.

Sir A. Gridley: I beg to move, in page 10, line 4, after "required," to insert:
and who has a current contract with the Minister.
The effect of this and the next two Amendments to this Clause standing in my name would be to limit to some extent what would appear to be a roving power of commission contained in the Clause as drafted. Under the Clause any firm could be compelled to give full information of any kind and extracts from any books which a busybody drawn in from outside to help the Minister for the time being might think it necessary to ask for, and it would seem to give that power not only in reference to a firm which may have contracts with the Minister, but in reference to firms with no orders at all. There is no limit to the investigations that may be made. I can understand that it might be necessary to seek information from a prospective contractor if he had already been a contractor and it was proposed to place a repeat order with him, and it was desired to see whether his price for the original contract had been fair and reasonable. That I can understand, if it was the intention of the Minister to place a second or third order with that firm, but I think it very undesirable to give a power which would allow perhaps secrets and confidential information which a firm was entitled to keep to itself to be handed over to someone else, who might wish to prosecute an inquiry into the affairs of another company and to discover a secret that they might be very glad to obtain possession of.
We had a very long Debate on a previous Amendment of mine, which resulted in a very much greater and longer struggle than I hoped would be necessary. I am anxious to curtail my observations as far as possible now, and to help the Measure along, and I hope the Minister will agree that it is reasonable to limit these powers to firms which have a running contract with the Minister. Any such firm, I agree, should be called upon to give any and all information which the Minister might reasonably require, and I do not want to restrict his powers there in any way whatsoever. With regard to my next small alteration, to insert the word "relevant" in line 5, the Clause

calls for extracts from any books or documents of any description specified in the directions. I think it is reasonable to ask that all books which contain any relevant information should be available to the Minister, and any copies of them that he may desire to have, but to have words as wide as these is, I think, giving powers far wider than any possible circumstances could allow. I hope the Minister, after his recent triumph, will be inclined to be somewhat more magnanimous this time.

7.36 p.m.

Mr. Burgin: I hope the Committee will feel, when I have been able to explain the object of this Clause, that really these Amendments are not desirable. Clause 9 is one of the Clauses which give to the Minister power to ascertain information, and it is one of the main operative Clauses under which check and control of prices, costs, and profits are to be exercised. Take the first Amendment. The immediate effect of it would be to exclude every sub-contractor, and that cannot be what my hon. Friend means. It is the sub-contractor's books that are vital. Take the next Amendment, to insert the word "relevant." Why every accountant knows that it is the seemingly irrelevant books which often contain the really interesting matter. I have no wish to go and pry into secret processes, that is not the point. The point is discovery in the full legal sense, and you must have access to every mortal paper relating to the matter. It does not matter whether it is a book labelled "Costs, to be looked at by the Government Accountant," or whether it is an old exercise book in a cupboard labelled "Not to be looked at by the Government Accountant." The Minister must be, in either event given the power to overhaul any documents. Let me assure the Committee, first of all, that we are talking here of information as to production costs in cases where Government contracts may be with people other than direct producers, that we want to ascertain the costs to sub-contractors, and that we may want power to look at the books of people in this line of industry other than those doing the particular job. The only yardstick with which you may be able to determine what is the proper cost for work, say, under contract A in a particular factory may be to look at a similar firm working in another factory and not yet working for the Ministry.
Remember that under Clause 7 the Minister has power to say to any contractor, "You shall do Government work." It seems rather odd that you should seek to limit the power of ascertaining information to those who already have a contract. You want to find out whether it is wise to place a contract with a particular firm, and one of the methods may be to find out whether they are particularly efficient in costings and methods of producing work through their factory. I do not think the word "relevant," therefore, need have any further argument. There might be a great deal of difficulty between the Minister's officers and contractors in obtaining information which one side considered relevant and which the other side considered not relevant. I think that any hon. Members of the Committee who are business men will feel that it is wiser not to have this limitation, although in the exercise of these powers nobody is proposing to go and turn a stockroom upside down and do all kinds of spring cleaning among counting-house records. That is not the idea at all.
The third Amendment would leave out the reference to documents "of any description specified in the directions." I think that that power again ought to be without limit. It is necessary that access to documents by the Minister's advisers should be insisted upon, and while I can assure the Committee that nobody wants to cause industry trouble unnecessarily, the power of the Minister to get to the root costs of every possible thing must be unfettered and unlimited. I would ask my hon. Friend, with his very wide industrial experience, to realise that if he were in my place, this is one of the Clauses to which he would attach particular value. I think he will feel that in asking the Committee not to accept these Amendments, I am the realist, looking at the probabilities of the way in which matters will develop, and that the cost accountants and specialists employed by Government Departments may be relied upon to be reasonable people who will exercise their powers without undue inconvenience.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

7.41 p.m.

Mr. Ellis Smith: This Clause states:

The Minister may direct any person producing, dealing in, storing or having control of any articles required for the public service …
I do not consider that the powers which the Minister has in this Clause are great enough. A new Clause is to be proposed later, and I do not consider that that Clause will deal adequately with the problems with which we are faced, but if the Clause is taken to a Division, I shall support it, because I believe that it is going along the right road.

Mr. Burgin: Is the hon. Member referring to this Clause or to the proposed new Clause?

Mr. Smith: I was dealing with the new Clause then, and I was saying that the Minister in this Clause has not got adequate powers to deal with the problem with which we are faced.

The Chairman: I hope the hon. Member will remember that we are not now dealing with the proposed new Clause.

Mr. Smith: I am dealing with the Question that the Clause stand part of the Bill.

The Chairman: I thought I understood the hon. Member to say that he was dealing with the new Clause.

Mr. Smith: No, Sir Dennis. I am dealing with the Clause in the Bill, and I am arguing that the Minister has not adequate powers to deal with the problem with which we are faced. I find that on the average £100 invested in War shares in 1932 is now worth £600, and that is a very serious situation for the people of this country, because it affects them in so many ways. Profits have not been restricted to the extent that they should have been restricted, and the people whom we represent are much concerned about it. I want to make an appeal to the Minister on behalf of the industrial side of our movement in particular. Before I proceed, however, let me say that much damage is done even before the manufacturers start manufacturing. In this Bill the Minister will have wide powers, and if those powers are used in the way in which we hope they will be used, a good deal of what I am going to speak about will be prevented from taking place, but unfortunately a great deal of damage has already been done.
I want to refer to a large amount of speculation that has taken place in metals, which has sent up the cost of those metals and of raw materials tremendously. I refer to the speculation which has taken place on the Stock Exchange. I remember raising this issue three or four years ago, on several evenings, one night in particular between 11 and 12 o'clock. I pointed out the serious effect of speculation upon our people, and hon. Members opposite were inclined to ridicule what I said. Those who claimed to have great experience on the Stock Exchange came to me later in the Inner Lobby and told me that those speculations had not the effect that I suggested. It is a fact that speculation on the Stock Exchange affects prices directly and indirectly including the prices of metals, and it also affects our people engaged in industry. Therefore, I am hoping that with regard to speculation and the brokers the Minister will take steps to prevent the inflated prices which result from speculation taking place.

The Chairman: The hon. Member is going rather wide of Clause 9. There is nothing in the Clause connected with such matters as the hon. Member is talking about. The Clause simply gives power to the Minister to require the production of documents and the keeping of records.

Mr. Smith: That is what I am dealing with. The Clause says:
The Minister may direct any person producing, dealing in, storing or having control of any articles required for the public service—
I am arguing that the Minister should use his powers in order to prevent speculation taking place and to prevent the cost of raw materials, metals in particular being sent up to the extent they have been sent up during the past few years.

The Chairman: The hon. Member has already done that, and I am afraid that I cannot permit him to go into a general discussion of the question of speculation.

Mr. Smith: I respect that Ruling and I will not proceed any further on that line. I was dealing with that problem because it is dealt with within the limits of the Clause, and it is necessary that someone should raise the question, in view of the fact that the country has suffered very much, and to an extent which it ought not to have done. The next point—and I am

raising this on behalf of the whole trade union movement—is, that we are concerned about the danger of inflation arising in this matter, and we do not want a repetition of what took place in connection with the last War. If the Minister will use the powers which are given to him in this Bill he will be able to take steps towards preventing inflation, of which there have been signs because the Government have not had powers to deal with it in the past. We consider that if the powers which the Minister obtains in the Bill are properly used he could prevent that inflation which brings about a vicious circle—sending prices up, causing demands for increased wages being made, the wages not keeping pace with the cost of living. That vicious circle does not assist us to prevent inflation.
Now I come to the question of costs. I have stated that the Minister's powers in this Clause are not adequate, and I want to bring out one or two difficulties we shall be up against when the Bill becomes an Act. I was reading yesterday and during the week-end the report of the Royal Commission on the Private Manufacture of Armaments, and I find that the firms met privately before the evidence was given, in order to prepare their evidence. If they will do that for a Royal Commission, what will they do now when a Bill of this character is introduced into the House of Commons? It is, therefore, very necessary that the Government should be aware of the position in order that between now and this Bill becoming an Act of Parliament other firms should not meet together in that way. During recent times it has been alleged by respective newspapers and other periodicals that fictitious returns have been given, and that depreciation accounts have been dealt with in such a way that auditors and accountants have not been able to detect the exact cost. This can be done in so many ways, and it is most important that now that the Minister is going to have the responsibility of making firms produce their books, that we should watch this kind of thing.
I suggest that in order to prevent fictitious returns being made the Government should take steps to see that no more fixed capital:is put into a firm than is absolutely necessary. During the last War any amount of fixed capital was put into firms in order to conceal the net profit.

Sir H. Williams: Will the hon. Member give instances?

Mr. Smith: I would rather not do that, because it would create difficulties which I do not want to create. The hon. Member knows only too well what went on. At that time he was familiar with what was taking place in the engineering industry, and there is no need in this House now to create further difficulties by giving further concrete examples.

The Chairman: Again, I am afraid the hon. Member is going far beyond the Clause. He cannot go into the whole question of costs and capital on this Clause. The Clause gives certain powers to the Minister and defines how he shall carry them out. His powers as to prices relate to the making of contracts, but he has no powers for dealing generally with the matters that the hon. Member is raising.

Mr. Marcus Samuel: The hon. Member said that he was speaking on behalf of his party. If he has orders from his party to do these things, what can the poor man do?

The Chairman: Order.

Mr. Smith: May I direct attention to Sub-section (1) which says:
Produce to any person authorised for the purpose by the Minister any book or document.
The point I am making is that, in order to prevent what I am suggesting took place on the last occasion, and has taken place since, it is necessary that the Minister should have his attention directed to the methods that are adopted.

The Chairman: The hon. Member does not see my point. The Minister is given these powers for a special purpose. He is not the Minister responsible for all the questions the hon. Member is raising.

Mr. Smith: I am dealing only with firms that will be carrying out Government contracts, and I am alleging that firms carrying out Government contracts may be responsible for adopting a policy of the kind I am outlining, and, in order to prevent that taking place in the future, I am saying that it will be necessary for the Minister to use all the powers contained in this Clause. I am drawing the

attention of the Minister to these things that we know took place, in order that he may be conversant with them and can give his attention to them.

The Chairman: The hon. Member must confine his remarks strictly to those matters which come within the duties and powers of the Minister of Supply.

Mr. Kirkwood: On a point of Order. If you look at the Amendments that have been accepted, Sir Dennis, you will see that the hon. Member for Stoke-on-Trent (Mr. E. Smith) is quite in order, because those Amendments have the object of crippling the action of the Minister, so that he will not be able to do what the hon. Member desires he should do. He desires that the hands of the Minister shall be strengthened in order that he shall be able to do these things.

The Chairman: I am afraid I do not understand the hon. Member's point. At any rate, the fact that an Amendment is put on the Order Paper would not make something in order on this Clause which would not be in order otherwise. I would point out that no Amendment to this Clause has been accepted.

Mr. Garro Jones: While appreciating the desirability of keeping this Debate within certain limits, I would draw your attention, Sir Dennis, to the wording of the first two lines of the Clause:
The Minister may direct any person producing, dealing in, storing or having control of any articles required for the public service.
There is no limitation whatever there upon articles for the production or supply of which the Minister is given specific powers in this Bill. This Clause gives the Minister power to require information about all articles required for the public service, whether they are produced for any purpose for which he requires them, or any other purpose.

The Chairman: I have been very careful in my Ruling. I have pointed out that the Minister by this Bill or by any of the Amendments on the Order Paper is not given power to deal with the matters which the hon. Member is raising.

Mr. E. Smith: The Clause states in Sub-section (2):
 If the Minister is satisfied that the records kept by any such person as aforesaid are in-


sufficient to enable a fair and reasonable price for the article in question to be determined.
I am arguing that firms have adopted all kinds of methods in order to prevent the net profits from being shown, and those of us who were familiar with what took place in the last War know that what I am dealing with took place. Since then firms have adopted other kinds of methods, such as forming subsidiary companies, finance companies, holding companies. I cannot go into that, but I am dealing with what the Clause allows us to deal with.

The Chairman: The hon. Member now sees what he can deal with and he knows what he cannot go into. I have said that I think he is going far beyond what can be dealt with on this Clause, and I must ask him to confine his remarks to somewhat narrower limits.

Mr. Smith: What I am leading up to is that there is no accountant competent to deal with these problems, and I was going on to show what takes place. They put more fixed capital into tools, cranes, machines, etc., and the point I am making is that there is no accountant competent to deal with these problems. The Minister should set up a cost checking department, which should be composed of an accountant, an auditor, and at least one technical man. That department should receive the advice of specialised people, who should be called in to deal with specific points as they arise. They should have power to examine the men's work rates and time cards, but I suggest that this checking department will not be able to carry out the proposals in the Bill unless they adopt the system that I am outlining.

The Chairman: The hon. Member has just made a definite suggestion. If he had put it down on the Order Paper as an Amendment to this Clause I should have had to rule it out of order and tell him that the only way he could do it was by way of a new Clause. It has nothing whatever to do with this Clause.

Mr. Smith: Will not the Minister, in administering this Clause, have to consider adopting a method of this character in order that the machinery can function as efficiently as possible?

The Chairman: The Clause does not deal with that at all. It deals merely with the question of the Minister being

able to obtain information that he may require. These other matters may be very relevant to other matters which the Minister may have in mind, and which the hon. Member may have in mind, but they do not come under this Clause.

Mr. Silverman: Further to that point of Order —

The Chairman: I am sorry, but this is a matter on which the opinion of the Chair has to be accepted. I have expressed it several times and I cannot have it argued.

Mr. Silverman: I was not presuming to question that these matters are to be determined by the Chair but merely to put a point before you for your consideration. Sub-section (2) deals with the Minister's powers to obtain sufficient records to ascertain what is a fair and reasonable price. What I wanted to put was whether or not my hon. Friend would not be in order in arguing that the Clause did not provide the Minister with sufficient powers to enable him to determine what is a fair and reasonable price.

The Chairman: The hon. Member is doing something which I deprecate very much indeed. He is asking me a purely hypothetical question, whether if the hon. Member argued something he would be in order. If the hon. Member argues it and I think he is in order I shall not interrupt him. If I interrupt him and say I consider him irrelevant it must be accepted by the Committee.

Mr. E. Smith: What I am submitting is that the Government should adopt a valuation of depreciation. Anyone who had experience of what occurred in the last War knows that, if anything, I have understated what took place. We shall watch to see how this is administered.

Mr. Tinker: I look upon this as a valuable Clause. If the Minister cannot get the information that he desires it is evident that someone is withholding it and making excessive profits. Have the Government any means of recovering profits that may have been made through misdoing? Many employers will go on evading their legal responsibilities if they think they can get away with it. They are willing to risk a fine, and public opinion does not weigh very much with them. What means has the Minister of dealing with those who will not recog-


nise their public duty and try to help us in an emergency of this character?

8.5 p.m.

Mr. Garro Jones: The Clause gives the Minister power to "direct any person having control of any articles required for the public service." What is the Minister's attitude towards that class of persons who exercise their control of articles required for the public service in some sort of restrictive organisation, such as the Tin Restriction Committee, for example, or other price-fixing organisation, or any one of those bodies such as the Import Duties Advisory Committee, whose operations, though not directly controlling these commodities, exercise a powerful influence upon the price that has to be paid for them? If there were no restriction on tin in operation the Government would be able to secure its supplies at a far lower price. That is a matter which the Minister has power to supervise under the Clause. Would he conduct inquiries into that aspect of the inflation of prices?
The second matter on which I should like him to give information is this: The actual books and records themselves are of little value in my view unless they are actually linked up with the producing machine. My hon. Friend the Member for Stoke (Mr. E. Smith) was making an extremely important point when he sought to obtain assurances that the Minister would breathe life into the books by connecting the figures up with the actual manufacturing operations. I will give one example. Take a jig which is being manufactured in a factory. In the books of the factory it says "so many hours of milling, price per hour is. 6d.," total milling operations so much."If he is content to accept the hours and the cost, the books are worthless, but if he says he not only wants the figures shown in the books, but he wants records showing how long each of these operations takes in the factory, and in corresponding factories, he will be able to compare them. He will not be able to achieve this without employing not only accountants but technicians, and that is the extremely important point which my hon. Friend, with his practical experience, was making. I hope the right hon. Gentleman will give the assurance that we are asking for both on that point and on the question of price-fixing associations.

8.8 p.m.

Sir H. Williams: I was interested in the speech of the hon. Member for Stoke-on-Trent (Mr. E. Smith) and I will refer to that part of it where he had not got out of order. He was dealing with depreciation, and naturally he wants these books to be examined with a view to that. He alleges that during the last War there was a great deal of faking with regard to depreciation. It is the first time that I have ever heard that particular thing suggested.

Mr. E. Smith: I am very loth to make allegations of that character against any one. What I said was that the Government should fix a valuation for depreciation in order that firms should know exactly where they stand.

Sir H. Williams: I think the hon. Member is under a misapprehension. Under the Finance Act to-day it is the practice, by agreement between an industry and the Board of Inland Revenue, to fix rates of depreciation for most classes of plant. If a rate of 7½ per cent. is fixed on something that is worth £100, £7 10s. is deducted in the first year. In the second year it is not £7 10s. but 7½ per cent. on what is left of the capital value. All that is done every year by the Income Tax authorities. During the War, when people were working two shifts and there was a great deal of overtime and a great deal of unskilled labour was being employed the effect was to increase very much the actual depreciation of machinery, and, on application, various industries, because of these adverse factors, were quite properly allowed higher rates of depreciation, and subsequent circumstances showed that in most cases the extra rates of depreciation were inevitable So that any suggestion of faking with regard to depreciation is totally unfounded. The real problem during the War was not the ability to buy more machinery than you wanted and charging it to revenue, thus evading tax and Excess Profit Duty. The real problem that the manufacturer was. faced with was not his inability to obtain plant like that. He could not get any plant as a rule without going to the Ministry and getting sanction to buy it. That is a complete misapprehension on the hon. Member's part. I do not suggest that everyone engaged in the business was a plaster saint.

Mr. Poole: Is it in order to debate everything that took place in the Great War?

Sir H. Williams: When the hon. Member for Stoke (Mr. E. Smith) was speaking and your predecessor, Sir, was in the Chair, he got rather beyond the point of depreciation and records. I was only replying to that and basing my speech on the knowledge that I acquired in the Ministry of Munitions.

The Deputy-Chairman: I understand that the hon. Member's speech, to which the hon. Gentleman is replying, was ruled out of order. If he is replying to something that was out of order he himself is out of order.

Sir H. Williams: As a matter of fact, the hon. Member was permitted to make all his references to depreciation and fixed capital. It was only when he got on the question of examining time and wage statistics that he was asked to confine his remarks within a narrower scope. I was only seeking to reply to that part of his speech which was permitted to be delivered.

The Deputy-Chairman: It is hard to say exactly what was and what was not in order. Perhaps it would be better not to reply to any of the hon. Member's points.

Mr. George Griffiths: If the hon. Member for South Croydon (Sir H. Williams) is allowed to proceed, I hope you will allow me to tell him something about the colliery owners and their profits during the War. It will take me all night.

The Deputy-Chairman: Perhaps we had better not discuss the matter any further.

8.15 p.m.

Mr. David Adams: I support the Clause as it stands, and am glad that the proposed Amendments were not accepted by the Minister, for they would certainly have restricted very substantially his powers of obtaining the knowledge he seeks as to whether the prices charged to the Ministry are fair and reasonable in all the circumstances. While I sympathise with my hon. Friend's efforts to bring into the Clause the question of price control, I would point out that there is a further Amendment on the Paper which may enable him to discuss that, and we look forward to an effective contribution

from him on the question of price control. If there were no price control, the Clause would in my judgment be of relatively little effect in preserving the interests of the Ministry and of the community. There cannot be any difficulty in ascertaining what prices are fair and reasonable. The Mover of the Amendments which were withdrawn was apprehensive lest either competing firms or chartered accountants might obtain a knowledge of a business which embraced many secret processes and so on, but, after all, we live in a business age, and everyone knows that the chartered accountant has, and in the nature of things must have, access to the books of all the concerns for which he acts, so that the only apprehension that can be felt must be as to the disclosure of information in certain directions which are undesirable.
We have heard something in the Debate with reference to costing systems, and it seems to be thought that they can play a part in the preservation of the interests of the Ministry of Supply in the matter of prices. They can, however, do no such thing. Costing systems are applied to all sorts of businesses nowadays, and, indeed, to municipal purchasing, hospitals and so forth; but, while they will tell you what your concerns are costing you to run, they can play no part in enabling you to secure from contractors and others fair and reasonable charges. That is not the function of any costing system with which I am acquainted. I am satisfied that the Clause as it stands will enable the Minister to have a very much better control than was obtainable in similar circumstances during the Great War, when the most phenomenal things were done by contractors without let or hindrance, because of the lack of the powers with which the Minister is now to be endowed by this Clause.

8.19 p.m.

Mr. Burgin: I hope that the Committee will permit me to have this Clause shortly. The hon. Member for Stoke (Mr. E. Smith) suggested that the powers of inquiry into documents were not adequate, but I hope he will feel that these piece-rate dockets and time cards come within the documents which I am enabled to inspect under the Clause. One of the reasons why I had to decline an Amendment moved by an hon. Member behind me was that I did not wish any limit to


be placed on the documents, because these are the very things which, as the hon. Member knows, may shed a lurid light on what is happening. In reply to the hon. Member for North Aberdeen (Mr. Garro Jones), it is certainly the intention to add technicians to the auditing staff and that practice will be considerably extended.
The hon. Member for Leigh (Mr. Tinker) asked what would happen if a contractor were found to have over-costed some article over a period before the error was discovered. The Clause gives two powers. It gives a power of prosecution in a bad case, but it also gives a much more important sanction, namely, that the Minister can appoint a control representative. The hon. Member, perhaps, is not aware that the contracts entered into with firms very often contain a Clause that the price shall be determined by arbitration, so that in those cases the arbitration Clause will be operable. Another very common practice is for an immediate price to be agreed at the time the contract is let, and for the parties then to proceed to work, the final price being assessed when it is seen how the contract has turned out. Obviously, in both of these cases the instance that the hon. Member had in mind would be provided for, and there would be an opportunity if anything was wrong, to ascertain what it was. But by far the most valuable sanction is the fact that the Minister can take over the business, appoint a controller, and run it. That is the sanction which is the most dreaded of all by industry. It is a power which, I am sure, with the collaboration of industry, will not have to be exercised; but, kept in reserve, it is a useful deterrent.
The hon. Member for Stoke also referred to the possibility of a rise in the price of metals, and the hon.Member for North Aberdeen referred to tin in particular. I am as willing and anxious as anyone to prevent that spiral of rising prices to which the hon. Members referred, but I am sure they will both remember that the conditions of the world to-day are such that the demand for these metals is far beyond that of our own country and our own supplies. The trouble is that most countries are engaged in a rearmament expansion programme, bidding against one another for the same

raw materials, the supplies of which may be limited, not only as a result of restriction schemes, but as a result of production failing. While there will be a great deal of inquiry into prices with the object of preventing what is called sporadic inflation, hon. Members must not take me as saying that an English price for an article which has a world price can keep the world price from soaring if the world demand is very great and in excess of the supply.

8.23 p.m.

Mr. Poole: I think the real point of difference that we felt might exist between the Minister and Members on this side was not as to whether the powers contained in the Clause were adequate, but as to whether an effective effort would be made to implement them and see that they were utilised to the uttermost. I visualise the Minister having a difficult time with the Bill, and, in the exercise of the powers conferred upon him by the Clause, I feel that he is going to need tremendous courage if he is going to tackle the problem in the way in which it ought to be tackled. It is all very well to talk about collaboration between industry and the Ministry. He will have what collaboration he requires as long as he is prepared to pay the price that industry requires. As soon as he desires to interfere with the prices to be charged for the commodities he requires, he will find that the forces arrayed against him will call for a good deal of effort on his part if he is to be successful in arriving at the conclusion that we all desire.
The difference between the Minister and Members on this side is reflected best in a very old saying. While the Minister believes that figures cannot lie, we on this side of the Committee are equally convinced that liars can figure. I speak with some knowledge of the preparation of statistics, and I know that it is the easiest possible thing to manipulate figures and to arrive at different conclusions from the same set of figures. In view of the colossal effort that is being called for from people in industry at the present time in connection with rearmament, and in view of the enormous sacrifices that men and women in this country are called upon to make in heavy taxation, greater than many sections of the community can bear, we ask that this Clause shall be implemented to the full; that there shall be


no loophole, but that it shall fulfil the purpose for which it is inserted in the Bill. Our major regret is that this provision to check profiteering in arms is so belated. We could have done with the Minister having these powers 18 months ago. Colossal profits that ought never to have been made have been made, and we hope the Minister will use these powers to the full, so as to put an end to this profiteering in arms.

8.26 p.m.

Lieut.-Commander Fletcher: When the right hon. Gentleman comes, at the end of the Committee stage, to review these discussions, will he take into consideration the advisability of publishing a White Paper on the subject of costing? There have been a great many Government statements on this subject from time to time, but I feel that it would be very much for the convenience of hon. Members if this White Paper could be issued. Would he also take into consideration the possibility, at long last, of publishing the terms of the McLintock Report?

8.27 p.m.

Mr. Burgin: The hon. and gallant Member is right in suggesting that, the appropriate method for a Minister to adopt after a Debate of this kind is to go carefully through the Official Report and pick up the ragged ends. I can assure him that that procedure will be followed by me. The suggestion which he has made—and to which he will not expect any answer across the Table now—will be seriously considered in the course of that review.

CLAUSE 10.—(Powers of controllers of businesses.)

8.28 p.m.

Mr. Hely-Hutchinson: I beg to move, in page 11, line 6, to leave out paragraph (c).
I do not think I need advance any argument in support of the Amendment beyond reading out the paragraph that it is proposed to delete:
In carrying on the business or that part of the business the controller "—
that is the person authorised by the Minister—
shall be deemed to be acting as the agent of the undertaker"—

that is the person whose business is to be taken over—
except that the undertaker shall not have any right to control the business or that part of the business.
I think people generally will submit to almost any infringement of their so-called rights provided that they are left with a sense of justice. I do not think any manufacturer who reads that paragraph can be left with such a sense of justice, for when his business is taken over, under the powers conferred on the Minister by the Act, the manager or owner of that business will not have committed any crime. He may have refused to accept a Government contract. The question of whether or no the refusal is reasonable or not is to be decided at the uncontrolled discretion of the Minister, and no sort of judicial proceedings will be necessary to decide whether the Minister shall issue a direction that the business shall be so taken over. In deeming the controller to be acting as the agent of the undertaker, we may recall Abraham Lincoln's phrase that "to call a sheep a hog doesn't make him one." There can be no doubt that the controller in charge of the business is the agent of the Minister, and to take away the control of the business from the undertaker and hand it over to a representative of the Minister, who can do anything he chooses to that business, is surely an injustice which cannot be contemplated. I hope my right hon. Friend will consent to the deletion of this paragraph.

8.31 p.m.

The Chancellor of the Duchy of Lancaster (Mr. W. S. Morrison): I have every sympathy with the motives that have inspired my hon. Friend to move this Amendment. I think his action is perhaps the result of a misreading of the paragraph that he wishes to delete. In the first place, I would recall to the Committee the fact that Clause 10 deals with the last step that can be taken by the Minister if all other measures to get production of some article vital to the public service have failed. There are in Clause 7 provisions which enable the Minister to give directions in the case of a refusal to execute a contract and these powers are hedged about with all sorts of safe guards. It is only when, first, the delivery fails, and then the direction fails, and there appears to be wilful obstruc-


tion on the part of some supplier, that this Clause comes into operation at all. The Clause being of that nature, designed for that last extremity, it is not surprising if it is framed in a way not specially favourable to the defaulting contractor. Indeed, when the purpose of the Clause is considered, I think my hon. Friend will agree that it is not wise to insert Amendments designed to make the way of the transgressor less hard.
Actually, the position with regard to the paragraph is this: The controller, when he is in, is deemed to be the agent of the undertaker. That is in order to put him in the legal shoes of the undertaker, and to enable him to carry on contracts of service with the workpeople as though he were really vested by the undertaker. The principle is borrowed from similar provisions with regard to a receiver in the case of bankruptcy. Where a bankruptcy order is made, the receiver is not the agent of the creditors but of the firm. Similarly, if it is necessary for this extreme power to be taken—when all other measures of persuasion on the one hand, and direction on the other hand, have failed—and to put in a controller, it is necessary to vest the controller with the requisite legal power. I think that, on reflection, my hon. Friend, if he accepts the background of the proposition—which is a penal provision not designed for the ordinary case, but for that, as I believe, very rare contingency where there has been something in the nature of wilful obstruction—I think he will agree that it is necessary to vest the controller with the requisite legal authority to act for the man who has been displaced because he will not deliver goods essential for the public service.

8.34 p.m.

Mr. Hely-Hutchinson: While thanking my right hon. Friend for his information on the Clause, may I say that the very words he used strengthen my argument? He used the words "defaulting contractor," and he spoke of it being unwise "to make the way of the transgressor less hard''; also he spoke of this as a "penal" paragraph. My whole point was that the undertaker—perhaps more appropriately to be called the corpse— does not reach this position under Clause 10 by any sort of legal process. There has been no sort of judicial pro-

cedure to establish that he is a defaulting undertaker or that he is properly subject to any penalty. If there had been judicial procedure, no objection could be taken to such a Clause as this, but the Minister is given powers solely at his discretion to make conditions, and there is no provision for arbitration of any sort or kind on whether or not the business should be taken over. Therefore this Amendment, with all respect to the judicial qualities of my right hon. Friend, goes to the very root of the case where a man is judged without trial to be a criminal, where the words "transgressor" and "penal" are used against him before any sort of judicial proceeding has taken place against him.

Amendment negatived.

Mr. Hely-Hutchinson: I beg to move, in page 11, line 10, at the end, to insert:
(2) Where, under the powers conferred upon him by this Act, the Minister authorises a controller to carry on the whole or any part of the business of an undertaker, it shall be incumbent upon the controller, as the agent of the Minister, to maintain the assets of the business or of that part of the business which he has been authorised to carry on, in the same condition of repair as that in which he took them over, and nothing in this Act shall empower the controller to sell or otherwise dispose of any of the land, plant, machinery, or other fixed assets of the business., nor to discharge any employés without the consent of the undertaker.
I will not weary the Committee with the same arguments, which lie behind this Amendment. I assume that my right hon. Friend will again advance the kind of argument that the powers of this Clause are to be used only in so-called penal cases. The purpose of the Amendment is perfectly clear. It is that where a controller is appointed to take over the business of an undertaker, the controller shall conserve that business and not conduct it in such a way that, when he hands it back to the original owner, its earning power or value is impaired. I have no special preference for the particular way in which the Amendment is drafted, but the purpose of it is perfectly clear. It is only justifiable to seek an Amendment of this kind because the undertaker under Clause 10 has not had his business taken over under any sort of judicial proceeding.

8.38 p.m.

Mr. W. S. Morrison: It is due to the moderation with which my hon. Friend has advanced his argument that I shall


endeavour to say only a few words in reply to the Amendment, which is, to substitute the Minister for the undertaker and to make the controller the agent of the Minister. The argument on that point has already been dealt with. It follows the procedure in bankruptcy where the receiver is deemed to be the agent of the person whose business is taken over. The second point of the Amendment would have the effect of limiting the power of the owner in the management of the business which has been taken over. It is the view of the Government that this Clause will very seldom be invoked, and only in an extreme case of obstinacy will it be taken into account. In these cases it will be put into force only if the articles required are vital to the public service. It is part of the temporary provisions of the Bill to meet a particular emergency, and I hope that my hon. Friend will see the overriding necessity of retaining the Bill as it is.

Mr. Higgs: Is it the intention of the Minister at any time to take over factories for the manufacture of any particular article which they are not producing at the time they are taken over? Would the Minister consider taking over a factory manufacturing machine tools for the purpose of manufacturing, say, jigs and gauges? If he were to exercise powers of that description —

The Deputy-Chairman: I really do not understand what this has to do with the Amendment.

Mr. Higgs: The Minister, during part of his speech, referred to the taking over of factories, and at the time referred to the commodities that particular factories manufactured.

The Deputy-Chairman: That has nothing to do with the Amendment. Amendment negatived.

Clause ordered to stand part of the Bill.

CLAUSE 11.—(Power to relieve undertakers from limitations on functions.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

8.42 p.m.

Mr. Higgs: This Clause appears to include public supply companies such as gas, electricity, water, etc., and as these companies are operated under many Acts of Parliament the Minister, as the Clause

is drawn, can ride roughshod over these many Acts. Is it his intention to do so, or can he give some undertaking not to interfere in any way?

The Deputy-Chairman: I cannot understand where gas companies come in under this Clause.

Mr. Higgs: "For the public service" in line 24.

The Deputy-Chairman: That is part of public services which come under a subsequent definition and have nothing to do with public utility companies. That is quite out of order.

Clauses 12 to 19 ordered to stand part of the Bill.

NEW CLAUSE —(Power to require report of independent auditor.)

(1)The Minister may give directions to any person who by virtue of any contract, whether made with the Minister or another Government Department, or any other person and whether made before or after the commencement of this Act, is under an obligation—

(a) to deliver any articles required for the public service; or
(b) to carry out any works so required;
to submit to the Minister a report of an independent auditor on the costs incurred in carrying out the terms of the contract.

(2) If any person—

(a) fails to submit any report which he is required to make under this Section; or
(b) knowingly or recklessly makes any untrue statement in any such report;
he shall be guilty of an offence under this Act. — [Mr. Stokes.]

Brought up, and read the First time.

8.43 p.m.

Mr. Stokes: I beg to move, "That the Clause be read a Second time."
This Clause, which stands in my name and that of my hon. Friends, gives the Minister power to require reports from an independent auditor. The object of the Clause is to permit the Minister to ask anyone engaged in the supplying of goods of any nature and of any quantity for the defence or for the armed forces of the Crown to render an independently audited statement of cost and profit made on each contract. Clause 9 of the Bill does not do this, nor in fact do the new regulations published to-day, as far as I understand them. This Clause is meant to be supplementary to Clause 9 and not to take


the place of it. What it seeks to do is to make known, to drag out into the glaring light of day, what profits are being made on these contracts, which neither Clause 9 nor the new regulations do. It seeks further—and I say this in the hope that I may secure the support of some hon. Members opposite—not entirely to eliminate profits, but rather, as the result of their securing the light of day, that they shall be properly limited. The Clause can be applied to anyone supplying anything from trouser buttons to big guns, and to sub-contractors, and I can see no reason why the Minister should not, if he so desired, apply it to the suppliers of raw materials. It is clear that the Clause is not obligatory. It is only permissive, and the Minister will choose his own time as to when and how he applies it.
Let me refer briefly to the reasons for the new Clause. Clause 9 permits the Minister to demand the production of books. This has the same disadvantage as the custom prevailing, at the present time; it will not get at the foot of the problem. The new Clause may not be satisfactory from everybody's point of view but at least it will deal with an aspect of the problem which I have studied for a long time. The fact is that it is quite impossible to ascertain what profit has been made on a contract unless you are able to reconcile the costs account with the general financial account of the business. Every competent manufacturer of a business knows this to be true, and takes steps that his cost accountants and auditors present him from time to time with a properly reconciled statement, and it is a matter of some astonishment to me and other hon. Members that the Government, who run the biggest business in the world, think it is quite unnecessary to take a precaution of this kind.
May I be permitted to explain for the benefit of those who may not understand fully what I mean by correlating the costs account with the financial accounts? The real profit of a business obviously depends on the rate of turnover. The costs themselves are usually based on an assumed turnover against estimated overheads, and if the turnover goes up then inevitably something that has been included in the estimated cost of the product for the purpose of covering overhead charges is converted into real profit. In most cases the

person who is the best fitted to make such a statement to the Minister is the outside accountant or auditor employed by the firm itself, but, of course, there are occasions where it would be inconvenient and perhaps embarrassing to employ the same auditor and the Minister should have power to appoint an independent auditor by agreement with the firm. May I say in condemnation of the present cost investigation system, which the new Clause seeks to supersede, that it is in my view cumbersome and inadequate, and almost invariably results in the Government having to pay more for what they are getting than they otherwise would.
I am not going to detain the Committee by quoting examples, but there is one example within my own knowledge, where a firm took a contract worth £14,000 on the understanding that there was to be no cost investigation in order to guard against what I call the nuisance value of cost accountants. When it was subsequently ascertained that cost accountants were going to investigate what was being done a howl immediately went up from the firm that they had not allowed for that form of nuisance, and they wanted 10 per cent. more, with the result that the Minister, I am glad, waived the examination which had been threatened. In regard to the sort of statement which it is suggested should be given, may I explain to the Minister that what we have in mind is that an auditor should follow the same general rules which apply to the audits of companies for Income Tax returns, which means, in effect, that they can be summoned for conniving at any fraud in the making of a false return. Secondly, it is important to appreciate that the return to the Minister will have to be in an agreed form so that profits cannot be thinned out or otherwise wangled to subsidiary companies.
I think that the new Clause should please everyone. First of all it should please the Government, because it will enable them to ascertain the real costs and profits, with minimum trouble and expense to themselves. Secondly, it should please the respectable manufacturer or supplier, because it will save him an immense amount of trouble and unnecessary interference by costs accountants. I do not suggest that they should be completely ruled out. They should have power to interfere if they wish, but in my


view their services can be dispensed with. In the case of most manufacturers it would remove what has to a certain extent become a stigma owing to the feeling of the public that excess profits are being made and that advantage is being taken of the national emergency. In the third place, I submit that the auditors and accountants involved will be pleased because it will remove the anomalous position in which they find themselves. They are often, and they admit it, protecting their own employers in practices which they know to be against the public interest. If I am asked to produce evidence I should like to read to the Committee an extract from a letter I have received from a prominent accountant in the City of London:
I have some ideas as to the limitation of armament profits, but as they include the regimentation of my own Institution for this purpose I think that they might be too shattering to voice. It is certain that as long as accountants shield their clients, a revelation of all material facts and figures is rather difficult.
That is yet another body of people who will be pleased. In the fourth place, the Government accountants themselves will be helped because this will simplify their work whilst not removing from them the right to make a fuller investigation if they wish. And, finally, it will greatly relieve and reassure the taxpayer that profits are being properly controlled and limited to the bare necessity. If the new Clause does not go as far as some of my hon. Friends would wish, I urge the Committee and the Minister to accept it as being a practical step in the right direction.

8.53 p.m.

Mr. E. Smith: I beg to second the Motion.
In the first place, I should like to make it quite clear that I do not believe the trouble is with the manufacturers. A great deal of the trouble is caused before the manufacturer starts on the material, and the people who are the cause of the trouble are the speculators, the financial companies and some of the insurance companies. A great deal of anxiety exists in the country with regard to the costing system and, therefore, I believe that the proposal in the new Clause is on the right lines. The Minister said on Clause 9 that he has power to examine the books. That power, in addition to

the powers given by the new Clause, will go a long way towards dealing with the grievance with which hon. Members on this side are most concerned. If the new Clause is introduced in the Bill, together with the powers which the Minister has already got, I suggest that the Government should fix, first, the value of depreciation; secondly, that they should fix overhead charges, providing that all things are equal and having regard to the conditions operating in any particular factory; thirdly, that they should make an average allowance for material; and, fourthly, an allowance for reasonable profit. If the costing system were based on those principles, as well as on the policy included in the proposed Clause, it would go a long way towards dealing with the position with which we want to deal. As to the necessity for the new Clause, any one who has followed events particularly during the last four years will not doubt the need for such a Clause. I will give the Committee an instance by quoting an extract from a broker's letter:
In view of the fact that the Government is spending so many millions immediately on an increase in the Air Force, all the aircraft companies will greatly benefit by this outlay, and big profits can therefore be netted by buying shares at once.
That was quoted in the "Manchester Guardian." It is an instance of exploitation taking place at the cost of the nation's needs. Here is another example:
In recent weeks, capitalists have not been noticeably shy about trying to make capital out of the national armament efforts. In deed, a number of speculators have already succeeded by intelligent anticipation of future political decisions in lining their pockets" —

The Deputy-Chairman: I am afraid the new Clause has nothing to do with speculation on the Stock Exchange, with which the hon. Member is now dealing.

Mr. E. Smith: In that case, I will give examples of how the nation's needs are being exploited, and show the need for this new Clause and for using the powers contained in the Bill. I find that John Brown, Limited, in 1936, made a profit which enabled them to pay 15 percent.; in 1937, 17½ per cent.; and in 1938, 17½per cent. The Stanton Iron Works paid, in 1937, 10 per cent., and in 1938 10 per cent. According to the "Daily Express," the General Electric Company has paid a dividend of 20 per cent. A group of machine tool manufacturers have now de-


cided to get together in a combine, and for every £1 share held.—

The Deputy-Chairman: The hon. Member is getting very wide of the new Clause. The new Clause deals with giving the Minister power to require the report of an independent auditor, and the dividends paid by certain companies are not very relevant to that.

Mr. Lawson: Surely my hon. Friend is in order in illustrating the need for this investigation. If there is one class of production to which it is necessary to draw attention, it is machine tools manufacture, and surely, my hon. Friend is entitled to illustrate his argument by referring to the dividends that have been paid during past years.

The Deputy-Chairman: I do not think the question of the need arises so much now. That came up on Clause 9, which has already been passed, and in which there is power to require the production of books, and so on. This new Clause is in addition to Clause 9, where the premise has been proved already.

Mr. Gallacher: Further to that point, Colonel Clifton Brown. There is a feeling in many parts of the country that some of the firms that are doing Government work can get such enormous profits from it that they can afford to take in other work even at a loss, and pay huge dividends. If there were a costing system and an independent audit which would inform the Government of the amount of profits that were being made on the work the Government are handing out, this sort of thing could not go on, and therefore, surely my hon. Friend is entitled to argue to that effect.

The Deputy-Chairman: It is not for me to answer that point, I think. Under the new Clause, the question at issue is whether an independent auditor should submit a report on the costs incurred in delivering any articles required for the public service and in carrying out any work for the Government.

Mr. E. Smith: I will try to keep to your Ruling, Colonel Clifton Brown. I am producing concrete evidence to show the necessity for this new Clause, and to show the Committee the extent to which the people are being exploited. We all know what has taken place with regard to the

machine tool manufacturers. Time after time the matter has been raised in the House, but now, the whole Committee sees the reason it was raised, and are prepared to accept the need for the Government taking the action they propose to take. According to the "Daily Express" of 16th June, 1939, a group of machine tool manufacturers are going to get together in order to exploit further the needs of the country, unless the Minister takes action as a result of the power he will have and on the lines proposed in this new Clause. For every £1 share held in the machine tool industry, £22 is to be paid. I suggest that the Government ought now to deal drastically with manufacturers who have exploited the nation's needs to that extent.
Hon. Members on these benches do not accept the present social system, but we realise that we have not yet got the backing of the people to enable us to deal with it. Therefore, it is reasonable to expect that firms should be allowed to make a reasonable profit. We are not speaking critically, within the limits of things as they now are, with regard to reasonable profits. What we say is that the Government ought to introduce a costing system based on the proposals of my hon. Friend the Member for Ipswich (Mr. Stokes), who has put the nation's needs before any industrial connection he has. He has come to the Committee, not like a number of hon. Members who represent narrow vested interests, but to make a proposal of this character. A year ago, he made a similar proposal. The chairman of Ransome and Rapier's, at one of their annual meetings, suggested that his firm should carry out Government work at a certain percentage. At that time, the Government were not prepared to accept the proposal. That is another indication of the necessity for accepting this new Clause, in order that we may force the Government into dealing with the nation's needs in the way we propose.
We believe that even these proposals will not deal adequately with the problem, and that the only adequate method of dealing with it is to construct national factories; but as the Government are not prepared to do that, we make these proposals in order that the nation's needs may be met at as low a cost as possible, and in order that hon. Members opposite


and certain newspapers shall not be able to say in the near future, as they are already hinting, that the time has come when there must be economies at the expense of the social services. If a scientific costing system of the kind proposed in the new Clause were introduced, we should be able to meet the nation's needs at as low a cost as possible, and save several millions pounds of the taxpayers' money.

9.5 p.m.

Sir A. Gridley: I am in sympathy with the principle which, I think, the hon. Member for Ipswich (Mr. Stokes) had in mind in framing this new Clause. At the same time, I hope the Minister has no intention of accepting it, because I think it is impracticable, and I will ask the Committee to bear with me while I address a. few remarks to the hon. Member for Ipswich on this subject as "a brither engineer"; to use the language of the hon. Member for Dumbarton (Mr. Kirk-wood). If I thought useful information, which would be effective in checking excessive profits could be secured by this new Clause, I should be wholeheartedly in favour of it. What does it seek to do? The Clause seeks to secure a report from an independent auditor on the cost of carrying out a contract. Suppose a firm has six or a dozen contracts proceeding at the same time, is the independent auditor to make his report on the cost incurred in completing each contract? That is the first difficulty.
Secondly, the independent firm of auditors could only report on the total cost of a contract when completed, and could make no analysis of the details making up the total cost involved. But here is the point at which I must definitely part company with the hon. Member for Ipswich. As an engineer, he must admit, as the hon. Member for Stoke-on-Trent (Mr. E. Smith) asserted a few days ago, that to arrive at the total cost of carrying out a job, it is necessary to employ trained mechanical experts. There are four things which have to be carefully analysed in arriving at the true cost of carrying out any engineering contracts whether in relation to guns, or tanks, or aeroplanes, or any other form of output. The first is whether the times allowed for the various machining operations are fair and reasonable. How in the world can a member of the staff of a firm of chartered accountants carry out such a duty?

Obviously no man on such a staff would have the requisite training.

Mr. Stokes: Does the hon. Member, or does he not, in his own business have his contracts costed up and if he does, would there be any difficulty in getting an independent auditor to credit them? I tried to explain in ray remarks that I was referring to the auditor who normally comes in to audit the firm's accounts. Would the hon. Member have any difficulty whatever in getting his firm's auditor to certify the result of any contract and make the necessary reconciliation to allow for the over absorption of overhead charges?

Sir A. Gridley: None whatever, but what the hon. Member seeks to do in this new Clause is to call in an outside firm presumably to certify that these costs are reasonable.

Mr. Stokes: The hon. Member cannot have listened to what I said. I was at great pains to say that in my view the person best suited to render this statement would be the auditor who is normally engaged in auditing the firm's accounts— the outside auditor who normally makes the Income Tax return. An outside auditor such as I described, goes to the Inland Revenue authorities and comes to an agreement with them as to what the profits of the business have been on the year. If that auditor makes a false statement he is subject to severe penalties. What I seek to do is to put auditors in the same position over these contracts and not to fiddle about with these ridiculous costs accounts.

Mr. Gallacher: The "brither engineers" do not seem to be getting on very well.

Sir A. Gridley: The hon. Member had better leave it to the engineers themselves to decide whether they are getting on well or not. [HON. MEMBERS: "He is an engineer too."] The next difficulty which I see in connection with an investigation of this kind is the difficulty of deciding whether or not a fair on-cost percentage has been added, in respect of the direct labour employed on the job. Here, again, it is only a man with expert knowledge of the practice in engineering workshops or other types of manufacturing shops who can possibly check that information. Certainly it was in this


respect that so many people at the time of the last War made money to which they were not entitled. Again in connection with allocating the costs to the various orders, men were charged to particular jobs which should never have been charged to those jobs. That, again, can only be checked by an expert who knows whether it takes three men or six men, to carry out a particular piece of work. Finally, as those who have been engaged in business of this kind know, you may decide to add a certain percentage of on-costs for direct labour based on the normal output of the business, but if you are extremely busy, you may quite well and frequently do make a profit on the on-cost charges made. How is an independent auditor to say, between one contract and another, whether the on-cost charge which you have made is or is not fair and reasonable in the circumstances?
There are only two methods by which you can succeed in achieving what the hon. Member for Ipswich and I are both anxious to achieve, namely that work of this kind should be carried out at a reasonable price. The first is the check which is at present going on by those who are, I agree, the only people capable of checking what the true costs are, and the other is the ultimate result disclosed in the balance sheet of the firm at the end of the year. One cannot discuss what is going to happen to firms who succeed in evading the check upon costs which experts are making, without having in mind the White Paper which has been published to-day proposing a new check upon excessive armament profits.
While it would be out of order to refer in any detail to this new proposal, we cannot, in considering this matter, leave out of account the fact that there is another effective way of diverting a proportion of excessive profits into the coffers of the nation, in some such manner as that proposed in the White Paper. I am not sure that in this matter we are not pursuing the wrong public enemy, so to speak. I am not so much concerned about the profits, which some may think reasonable and others regard as excessive, which may be made by industrial undertakings. After all, it does not matter so very much whether you are distributing 15 per cent. or 30 per cent. if it is being distributed to a large num-

ber of small shareholders. Hon. Members may laugh, but there is nothing to laugh about. They are always arguing in favour of increasing the spending power of the community. If a man who has been in receipt of £30 in dividends on an investment of £200 in an industrial undertaking, gets £50 in a good year that is really no very serious matter, because it gives him a little extra money to spend. The man I am after is the individual profiteer. He is the man I should like to succeed in tracing down and holding up to scorn, and I shall have something to say about that later, at the appropriate moment. On this particular Clause I speak with 40 years' experience of industry when I say that it will be of no value to the Minister, that it will get him no further forward, and for the reasons given I hope he will not accept it.

9.16 p.m.

Mr. Alexander: Though I listened with great care to the speech of the hon. Member for Stockport (Sir A Gridley), I have failed to discover a single point in it which shows the new Clause to be an impossible one. In fact, the longer he talked the more he proved the necessity for the Clause, and unless the Minister is going to accept it I think he will find some difficulty in answering the case made for the very simple propositions contained in it. We have had many arguments in the past three or four years as to the necessity for taking adequate measures to prevent profiteering at the taxpayers expense in a national emergency but it is only within the last 24 hours that we have had, at last, the first specific proposition made by the Government. Of course, we cannot now discuss the details of the White Paper which has been issued, but I would point out that not everybody engaged upon Government contracts in connection with the national emergency is covered by the proposals in that White Paper. It concerns only those who have contracts to the extent of £200,000 per annum; all the others will be exempt from its proposals; and therefore it becomes all the more urgent to adopt this new Clause, so that it may "rope in," on a basis of properly-ascertained profits, all that great number of people who are engaged on Government work to the extent of less than £200,000 and those are contracts on which very large profits can be made.
One is a little tired of answering, as some of us have been answering for the last 20 years, the case made by the hon. Member for Stockport, that if there are a large number of small shareholders in any company engaged upon Government contracts the payment of a high dividend in a particular year will not make very much difference. I will advise the hon. Member to study afresh the position as to the true spread of investments of that kind among the community as revealed in the annual return of the Board of Inland Revenue. It is true that one may pick up the share list of a particular company and find there are 1,000 shareholders with very small holdings, but if the research were carried a little further it might be found that some of those who owned 100, 200 or 300 shares in that company had similar holdings in some 30 or 40 other companies, many of them also engaged on armament work. Therefore, that argument of the hon. Member's "cuts no ice." The real point is, are those men making an undue profit at the expense of the taxpayer during a time of national emergency?
It is a great pity that we cannot remember what happened in fairly recent history. There is not a single point which has been made from the other side tonight which one. cannot find enshrined in the records of the Official Report during the years 1914, 1915, 1916 and1917, in the debates that led up to the introduction of the Excess Profits Duty,"under the whip"if I may use the scornful words of the late Mr. Bonar law there was not a case which was put up in the Debate recently about arbitrators which one could not find in Debates when these matters were discussed before. What do we find in there records of the last War? Because there was then no efficient check upon profits ,although there was a costings system in the last two years—

Sir A. Gridley: Nothing like the costings system now.

Mr. Alexander: I say that, in spite of the costings system adopted during the last two years of the Great War—and it was a good costings system, and there was also the check of the national shell factories which we were bound to establish before the War could be won—large profits were still made. We find in the

Report of the Committee on War Wealth —although all of it, I know, did not come out of engineering—that fortunes totalling over £4,000,000,000 were made during the War, additional to what the people had had before. We have been suffering under that ever since.
The case we have put forward on many occasions has been that it is not the best way of dealing with the matter to allow heavy profits to be made and then to take a little of them back. My hon. Friend the Member for Ipswich (Mr. Stokes) and those who support him in his new Clause have provided an efficient method of checking-up as early as possible how things are going, so that with the knowledge thus gained officials will be able to prevent high rates of profit being made in respect of subsequent contracts which are placed. It is impossible for the Minister of Supply not to be interested in this proposal. He ought to be interested in it. I have had some correspondence with one or two people who were very much concerned about things I have said in the last 12 months regarding profits on arms' contracts, and when it comes down to an examination of the position they say this: "Well, Mr. Alexander, we do our best. We try to get a costings system, but unless we are to run the risk of making a loss at any particular stage of a process or an assembly operation we must actually make a small profit, and the orders are so large that we cannot help making big profits upon our capital turnover." That may be so; I think it is quite likely to be so. If we are to have any check upon that we shall have to adopt some method in line with what is proposed in this new Clause. Having regard to the fact that the Government have put forward fiscal proposals for pulling back by means of extra taxation some of the profits which have been made, and that they leave out of account all contracts of less than £200,000 a year, it seems to be essential to have this Clause in the Bill, and if the Minister is not prepared to accept it I hope my hon. Friend will Divide upon it.

9.25 p.m.

Mr, W. S. Morrison: Perhaps it would be as well if I intervened now to indicate the attitude of the Government towards this new Clause. A great deal of the discussion upon the Clause has been on the lines of contrasting what is called the


present costings system with that proposed in the new Clause. But I venture to observe that for the purpose of gauging the value of the proposal of the hon. Member for Ipswich (Mr. Stokes) that is not the test that we ought to apply at all, but rather we should look at his new Clause with the knowledge that we have already passed Clause 9. What does the new Clause propose? It renders it permissive—not obligatory—to the Minister to require the report of an independent auditor on the costs incurred in carrying out any particular work. But I invite attention to Clause 9, which has already been agreed to and which is drawn in very much wider and more drastic terms than the new Clause, because it says that the Minister may direct any person carrying out any work to produce to any person authorised for the purpose by the Minister all the books and documents and information necessary for costing.

Mr. Stokes: That is permissive.

Mr. Morrison: And so is the Amendment of the hon. Member. But what I am concerned to point out is that Clause 9 is very much wider than the new Clause, and includes his Amendment implicitly; that is to say, the Minister may direct that the undertaker shall "produce to any person authorised for the purpose by the Minister" books and documents. Note, the words are "any person "—the widest expression that can be used and, of course, include an independent auditor such as the hon. Member wants. Is it wise for the the Committee to agree to such a restricted choice of persons to whom books can be produced? Surely not. One of the best ways of arriving at a true costing system is to compare like with like. But if you shut off into watertight compartments, each audited by a separate independent auditor, the work of costing munitions production, you will not get the same information as you would get if you have one man appointed by the Minister to cost several works of the same sort, compare the results, and make the investigation valuable from the point of view of seeing what has really been spent. Under Clause 9 the independent auditor required by the hon. Member for Ipswich can be appointed, and there is no need therefore to give the Minister additional power to appoint

such a person. Under Clause 9, in addition to the power to appoint an independent auditor, an officer of the Ministry may inspect the books and he may carry away copies of them.
I mention that because it is not merely that this new Clause is unnecessary— which should be a sufficient reason for not passing it—but it may actually be restrictive and harmful. It is a doctrine of the law that if you give general powers of a wide character, and then proceed to direct that one of those powers shall be specifically mentioned, there is always a danger that the fact that other powers are not equally specifically mentioned may be held to exclude them. The wise thing, and the safe thing in these cases, when you have given a general power, is to leave it general, and not to weaken it or limit it by implication, by mentioning one power and not mentioning others. I am not concerned to go into what has been said about profiteering in general. That is an argument of much wider scope and much greater importance. But I do say, first of all, that the hon. Member's new Clause is not necessary, because the power which it affords is already comprised in Clause 9, and in suitable cases could be used under Clause 9; and, secondly, that the powers of Clause 9 enable other forms of investigation to take place, and therefore I invite the Committee not to accept the Amendment.

9.31 p.m.

Mr. Stokes: I endeavoured to make clear in my opening remarks that this Clause was not to fake the place of Clause 9, but to be supplementary to it. I cannot see in Clause 9 anywhere a statement that an audited statement shall be required. It says that firms may be required to produce books and papers and the like. With all due respect, I do not believe the Minister understands what is involved. I agree that in my remarks I said it might sometimes be advisable, owing to the complicated system of working of companies, not to ask the auditor who is normally engaged in auditing the company's accounts to present the auditor's statement, but I am quite satisfied myself that in about 99 per cent. of the cases it will be far the easiest, the quickest, the cheapest and the most satisfactory way. What the Minister envisages in regard to Clause 9 is that he has the power to have all these books pro-


duced and to appoint an independent auditor, and he can then say, "Get to work." What the accountants will reply is:"There are simply not enough of us. We cannot all of us go off and audit the books of a company in order to arrive for you at the cost of a particular contract." It is the person who understands the accounting system of the firm in question who is best able to give us a certificate on oath, as it practically is, of what the profits on a particular contract are. Clause 9, to my view, is absolutely unsatisfactory as it stands. It may be that my Clause as drafted is not right—that is another matter; but if the Committee is going to go off with the idea that Clause 9 is satisfactory, then the majority of Members of the Committee do not understand what is involved.

Mr. W. S. Morrison: Does the hon. Member say that the words in Clause 9(1)
to produce to any person authorised for the purpose by the Minister,
are not wide enough to include an independent auditor?

Mr. Stokes: I agree that they make it possible, but what is going to happen, if we let the Minister get away with this, is that he will be told that there are not enough auditors in the world, and not enough time? I have talked to associations of auditors and to auditors in the City, and they all take the same view that this is simply not practicable. What is practicable is that the auditors who normally audit the accounts of the company should give a certified statement of what the profits on a contract are.

9.34 p.m.

Mr. Gallacher: I am not at all satisfied that the Minister is aware of the importance of this new Clause. I am concerned about the necessity of taking every possible precaution to stop the making of excessive profits. I have been called to account for using the expression "a bunch of rogues," but, no matter what you do, you cannot catch or stop the fellows from profiteering. The hon. Member for Stockport (Sir A Gridley) gave a mild blessing to the new Clause, but he went on to argue that it would not stop profiteering. For, he said, how can the accountants know whether the employers are allowing too much time—too much bonus. The accountants do not have to worry about that. Does the hon.

Member seriously suggest that firms will allow too much time, too much bonus and too much wages to the workers? That would be a paradise for the working class. The question is, will the employers allow enough time? But the. trade unions may be relied upon to look after that matter.
In regard to employing too many men on a particular job and putting in time for too many people, if we have a genuine desire, in dealing with this question of Government contracts, to ensure that the public are not being fleeced by the employers, you can again rely on the trade unions and the shop stewards to prevent anything of that kind. My hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) and myself have in the past had many experiences of such tricks, but they can be stopped. If the Minister were to apply such a proposal as this, then after every measure has been taken to ensure that undue profits will not be made, the objections raised by the hon. Member can easily be dealt with. There is no doubt whatever that there is a great advantage in the Minister having these powers of getting proper costs from the accountants. I have heard the old argument of the lawyers often in the Scottish Standing Committee that if you specify one thing it sets up a tendency to rule out the other things which are not specified, but that is merely a lawyer's quibble. The Minister knows that he has the power, and can use it, and that the Committee and the House of Commons would back him up. This is not a matter which will go to court, where you will have judges and barristers firing off heavy legal howitzers at one another and creating all kinds of noise and confusion. If the Minister had another Clause which gave him the specific power, which would be very valuable, it would not in the slightest degree affect him in using any other power which he might desire.
Hon. Members opposite who oppose the Clause because they and their associates believe that they cannot be prevented, no matter what we may do, spoke about the small shareholders. Before the War it used to be the widow's mite. An hon. Member thought that the small shareholders should get increased spending power but he has never been heard to suggest a little more spending power for the old age pensioners. Let the Government see what steps can be taken to prevent excessive profits being made, because once they are


made, even if you take some back, the process of doing so will cost you something, Why let them take it and then have to spend a whole lot of money trying to get it back? That is a most foolish thing to contemplate. Surely when first taking on a new responsibility the Minister should be prepared to face the problem and see whether any new powers can assist him in preventing the making of excessive profits, and the people of the country from being fleeced. If the Clause is carried into effect, you will get the cooperation of the factory workers, the trade unions and the shop stewards in connection with overtime and the putting on of extra men. You will be able to save an enormous amount of money for this nation, and you may be able as a consequence to do justice to the real poor shareholders, the old age pensioners.

9.41 p.m.

Mr. Riley: I am not satisfied with the explanation of the new Clause given by the Chancellor of the Duchy of Lancaster. The argument of the right hon. Gentleman was that every power which is sought in the Clause is contained in Clause 9. I have been looking carefully at Clause 9 and it seems to have as its distinguishing feature these words:
The Minister may direct any person producing, dealing in, storing or having control of any articles required for the public service or carrying out any works so required, to produce to any person authorised for the purpose by the Minister any books or documents of any description specified in the directions and to permit the person so authorised to take copies of or extracts from any such books or documents.
I would ask the right hon. Gentleman where the power proposed resides in Clause 9, and I ask for an assurance from the Minister on that point. Clause 9 says:
and to permit the person so authorised … to take copies or extracts from any such books or documents.
It may be argued that such documents would show the costs but it would be the merit of the proposed new Clause that it laid down that documents must be available to show the costs under the contract in order to ascertain what profits are being made. That is a clear distinction and an additional power, which is not contained in Clause 9. If it is argued by the hon. Member for Stockport (Sir A. Gridley) that the proposal is imprac-

ticable, I reply that it is puerile to argue that you could get a number of contracts going through a workshop at the same time. In every well-organised establishment there is a costing system applied to every individual job, and every workman is either checked up by some responsible person at every stage of the process or himself has to put down the time occupied by it. At the conclusion there is a total of the time and of every item of cost that that job has to bear. It cannot be suggested that everybody in a workshop will be engaged in a game of duplicity to deceive. People will carry on. their work in the ordinary way. By the proposed new Clause there will be a real safeguard that at the conclusion of the work on any contract there would be data by which the cost could be ascertained. For that reason I suggest that the Minister will be well advised to have the additional power to strengthen Clause 9.

9.45 p.m.

Mr. Price: This is surely very largely a matter of procedure, and my hon. Friend who has moved this new Clause is putting forward a method of procedure which, in my opinion, is likely to be much more efficient than that submitted by the Government. It is surely better to use existing machinery wherever possible. Any Member of this Committee who has had anything to do with companies, whether public or private, will know that every year when the balance-sheet is made up every reputable firm that wants to keep its accounts straight and be correct with the Income Tax authorities will have a chartered accountant coming in to examine its books and draw up the accounts for the year. On the basis of the report of that chartered accountant, Income Tax is assessable and paid. It is in the interests of the firm to do this and of every reputable firm of chartered accountants to examine everything fairly and squarely as between the Revenue authorities on the one hand and the firm on the other. The machinery, therefore, is all there now, and all that we ask is that the Government shall use that machinery. I know the Minister will no doubt say that he intends to do so.

Mr. Burgin: Certainly.

Mr. Price: But the Minister may not always be there. There might be another Minister there some day, and he


might not use the power which he thinks is there and which might be there. It is surely in this matter much better to tie the Minister down, because he may not always be there and things may be different. The upshot of this Clause is to put it beyond peradventure that the existing procedure of all reputable companies which are presenting their accounts year by year shall be used and that they shall find independent auditors, who, of course, will be the auditors whom they always employ for the purpose of keeping their accounts.

9.48 p.m.

Sir R. Acland: I listened as the hon. Member for Ipswich (Mr. Stokes) emphasised the difference between the words "an independent auditor"—which I thought should have been, in his own interest, "the independent auditor who audits the firm's accounts"—and the words "any person" in Clause 9. The Minister is obviously right in saying that "any person" quite clearly includes the person who audits the firm's accounts, and the real difference of the words is that in Clause 9 the requirement is to produce "any books or documents," and in the proposed new Clause it is to submit a report on costs. I think the Minister will agree that books are difficult to read and that it is difficult to extract from books covering an enormous number of jobs carried out in the course of a year the particular costs of one job, and it is possible for a firm to make things very difficult for a complete outsider coming in, with no general knowledge of the firm's business. Will it be possible under the words "to produce any books and documents" for the Minister to send down the particular man who is the firm's auditor, and will it be possible for that man to act as the servant of the Minister and to use also the knowledge which he has as to the firm's local position? When the books are shown to him in his capacity as representative of the Minister, and when the firm tries to make out that this, and this, and this has been the cost of a certain job—and on the surface of the books no other conclusion may be possibles—will it be possible for the Minister's servant, this auditor, to say, "By inspecting your books and by listening to what you say now I cannot find anything wrong with the cost that you have put before me, but using the knowledge which I gained

of your business when I made out your Income Tax returns last year, I tell you, and I shall tell the Minister, that you are not giving an accurate statement of the case ''? Can the Minister assure the Committee that ho has really had this out with the auditors, and that he is sure that they will not regard it as a breach of their duty to their clients. to use the knowledge which they acquire in getting out Income Tax returns to read the books submitted to them under Clause 9? If the Minister will say that he has discussed that matter with the leading members of this very great profession and is satisfied that they will have these powers, I think the Minister is in the right, but if he is not satisfied on that, I think the new Clause is most necessary.

9.51 p.m.

Mr. Burgin: I think we have all entirely the same objective in view. I think we want to have under this Bill the most complete machinery for ascertaining the cost of every item which is included in costs, properly or improperly. I have taken a great deal of trouble in framing Clause 9, and in having it framed, and a great deal of attention has been given to Clause 9 (1), but the really operative part is Clause 9 (2), which states that the Minister has power to tell firms what records he desires them to keep and in what form he wants them to keep those records. The Minister accordingly has power to tell firms that he desires them to keep costing sheets which will show the cost of each individual contract, and the Minister has power to tell them, when the contract is completed, that those certificates of cost of each contract should be audited by the auditor. That is why, with every sympathy with the hon. Member for Ipswich (Mr. Stokes;), who moved the new Clause, I want to tell him that with the same objective in view, and realising that what may be called the post mortem after a contract has been completed may be an extremely valuable method of checking, from an angle of 45 degrees, what has happened in the costing of the contract just completed, Clause 9 (2) gives me power to specify the type of records to be kept for the purpose of showing what is a fair and reasonable price for the article in question, and indeed power to require that document to be certified, to be certified by an auditor, and to be certified by an independent auditor; and I can choose


the auditor of the firm or any other person to be the one who certifies that certificate.
Therefore, the whole of the powers that are asked for by the new Clause are included in Clause 9, and whereas Clause 9 is general and says that I may do this during the contract and not wait until the end of it, the new Clause deals with it only when the contract is over, and it is limited, because it is an independent auditor, whereas my Clause 9 is completely general and may include an independent auditor or the firm's auditor. I ask the hon. Member to accept my assurance that every one of the powers for which he asks in this Clause is included in Clause 9, and for that reason I ask him not to press his Clause.

Mr. Stokes: Cannot the Minister more specifically include in Clause 9 words to cover what I mentioned, between now and the Report stage?

Mr. Burgin: I am willing to make the same careful review of the discussion on this Clause as I promised other hon. Members I would make on other Clauses in the Bill. As at present advised, I think the general is infinitely better than the particular. I am not at all sure that the cost of working out the contract is the only thing we want to aim at. You want something much wider. You want every single ingredient. It may be that auditing may not be the only thing required. It may be necessary to have a certificate by a technical man. Therefore, there is an advantage in having the Clause general. Although I will look into the matter between now and the Report stage to see whether it is wise to alter the Clause, my impression is that Clause 9 is better drawn and covers all the points raised by the hon. Member.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 128; Noes, 193.2157

Division No. 185.]
AYES.
[9.58 p.m.


Acland, Sir R. T.D.
Hall, J. H, (Whitechapel)
Parkinson, J. A.


Adams, D. (Consett)
Harris, Sir P. A.
Pethick-Lawrence, Rt. Hon. F. W.


Adams, D. M. (Poplar, S.)
Harvey, T. E. (Eng. Univ's.)
Poole, C. C.


Adamson, Jennie L. (Dartford)
Hayday, A.
Price, M. P.


Alexander, Rt. Hon. A. V. (H'lsbr.)
Henderson, J. (Ardwick)
Rathbone, Eleanor (English Univ's.)


Ammon, C. G.
Henderson, T. (Tradeston)
Richards, R. (Wrexham)


Banfield, J. W.
Hills, A. (Pontefract)
Ridley, G.


Barnes, A. J.
Hopkin, D.
Riley, B.


Barr, J.
Isaacs, G. A.
Ritson, J.


Batey, J.
Jagger, J.
Robinson, W. A. (St. Helens)


Beaumont, H, (Batey)
Jenkins, A. (Pontypool)
Salter, Sir J. Arthur (Oxford U.)


Benn, Rt. Hon. W. W.
Jenkins, Sir W. (Neath)
Seely, Sir H. M.


Benson, G.
Johnston, Rt. Hon. T.
Sexton, T. M.


Broad, F. A.
Jones, A. C. (Shipley)
Shinwell, E.


Bromfield, W.
Kennedy, Rt. Hon. T.
Silkin, L.


Brown, C. (Mansfield)
Kirby, B. V.
Silverman, S. S.


Buchanan, G.
Kirkwood, D.
Simpson, F. B.


Burke, W. A.
Lansbury, Rt. Hon. G.
Smith, E. (Stoke)


Cape, T.
Lathan, G.
Smith, T. (Normanton)


Cluse, W. S.
Lawson, J. J.
Sorensen, R. W.


Cocks, F. S.
Leach, W.
Stephen, C.


Collindridge, F.
Lee, F.
Stewart, W. J. (H'ght'n-le-Sp'ng)


Cove, W. G.
Leslie, J. R.
Stokes, R. R.


Daggar, G.
Logan, D. G.
Strauss, G. R. (Lambeth, N.)


Dalton, H.
Lunn, W.
Summerskill, Dr. Edith


Davidson, J. J. (Maryhill)
Macdonald, G. (Ince)
Taylor, R. J. (Morpeth)


Davies, S. O. (Merthyr)
McEntee, V. La T.
Thurtle, E.


Dobbie, W.
McGhee, H. G.
Tinker, J. J.


Dunn, E. (Rother Valley)
McGovern, J.
Viant, S. P.


Edwards, A. (Middlesbrough E.)
MacLaren, A.
Watkins, F. C.


Edwards, Sir C. (Bedwellty)
Maclean, N.
Watson, W. McL.


Fletcher, Lt.-Comdr. R. T. H.
Marshall, F.
Welsh, J. C.


Frankel, D.
Mathers, G.
Westwood, J.


Gallacher, W.
Maxton, J.
White, H. Graham


Gardner, B. W.
Messer, F.
Williams, E. J. (Ogmore)


Graham, D. M. (Hamilton)
Milner, Major J.
Williams, T. (Don Valley)


Green, W. H. (Deptford)
Morrison, Rt. Hon. H. (Haokney, S.)
Wilson, C. H. (Attercliffe


Greenwood, Rt, Hon, A.
Morrison, R. C. (Tottenham, N.)
Windsor, W. (Hall, C.)


Grenfell, D. R.
Naylor, T. E.
Woods, G. S. (Finsbury)


Griffith, F. Kingsley (M'ddl'abro, W.)
Neal-Baker, P. J.
Young, Sir R. (Newton)


Griffiths, G. A. (Hemsworth)
Oliver, G. H.



Griffiths, J. (Llanelly)
Owen, Major G.
TELLERS FOR THE AYES. —


Groves, T. E.
Paling, W.
Mr Adamson and Mr. charleton.


Hall, G. H. (Aberdare)
Parker, J.





NOES


Acland-Troyte, Lt.-Col. G. J.
Goldie, N. B.
Perkins, W. R. D.


Adams, S. V. T. (Leeds, W.)
Gower, Sir R. V.
Petherick, M.


Albery, Sir Irving
Gridley, Sir A. B.
Pickthorn, K. W. M.


Allen, Col. J. Sandeman (B'knhead)
Grimston, R. V.
Radford, E. A.


Anderson, Rt. Hn. Sir J. (Se'h Univ's)
Guest, Lieut.-Colonel H. (Drake)
Raikes,' H. V. A. M.


Apsley, Lord
Gunston, Capt. Sir D. W.
Ramsbotham, Rt. Hon. H.


Aske, Sir R. W.
Hambro, A. V.
Ramsden, Sir E.


Baillie, Sir A. W. M.
Hammersley, S. S.
Rankin, Sir R.


Baldwin-Webb, Col. J.
Hannah, I. C.
Rathbone, J. R. (Bodmin)


Balfour, G. (Hampstead)
Heilgers, Captain F. F. A.
Reed, A. C. (Exeter)


Barrie, Sir C. C.
Hely-Hutchinson, M. R.
Reed, Sir H. S. (Aylesbury)


Beamish, Rear-Admiral T. P. H.
Hepburn, P. G. T. Buchan-
Reid, J. S. C. (Hillhead)


Beauchamp, Sir B. C.
Higgs, W. F.
Reid, W. Allan (Derby)


Beaumont, Hon. R. E. B. (Portsm'h)
Holdsworth, H.
Renter, J. R.


Bossom, A. C.
Holmes, J. S.
Robinson, J. R.(Blackpool)


Boulton, W. W.
Hopkinson, A.
Ropner, Colonel L.


Boyce, H. Leslie
Horsbrugh, Florence
Rosbotham, Sir T.


Broadbridge, Sir G. T.
Hudson, Capt. A. U. M. (Hack., N.)
Ross, Major Sir R. D. (Londonderry)


Brown, Brig.-Gen. H. C. (Newbury)
Hulbert, Squadron-Leader N, J.
Ross Taylor, W. (Woodbridge)


Browne, A. C. (Belfast, W.)
Hume, Sir G. H.
Rowlands, G.


Bull, B. B.
Hunter, T.
Royds, Admiral Sir P. M. R.


Burgin, Rt. Hon. E. L.
Jarvis. Sir J. J.
Ruggles-Brise, Colonel Sir E. A.


Butcher, H. W.
Jennings, R.
Russell, Sir Alexander


Campbell, Sir E. T.
Joel, D. J. B.
Salmon, Sir I.


Cary, R. A.
Jones, Sir G. W. H. (S'k Nw'gt'n)
Samuel, M. R. A.


Chapman, A. (Rutherglen)
Jones, Sir H. Haydn (Merioneth)
Sandeman, Sir N. S.


Clarke, Colonel R. S. (E. Grinstead)
Jonas, L. (Swansea W.)
Schuster, Sir G. E.


Clydesdale, Marquess of
Kerr, Colonel C. I. (Montrose)
Selley, H. R.


Cobb, Captain E. C. (Preston)
Kimball, L.
Shaw, Captain W. T. (Forfar)


Cook, Sir T. R. A. M. (Norfolk, N.)
Lamb, Sir J. Q.
Shepperson, Sir E. W.


Cooke, J. D. (Hammersmith, S.)
Law, R. K. (Hull, S.W.)
Smith, Sir R. W. (Aberdeen)


Cooper, Rt. Hon. T. M. (E'burgh, W.)
Leech, Sir J. W.
Somervell, Rt. Hon. Sir Donald


Courtauld, Major J. S.
Lees-Jones, J.
Somerville, Sir A. A. (Windsor)


Courthope, Col. Rt. Hon. Sir G. L.
Lewis, O.
Southby, Commander Sir A. R. J.


Cox, H. B. Trevor
Liddall, W. S.
Spens. W. P.


Craven-Ellis, W.
Lindsay, K. M.
Stourton, Major Hon. J. J,


Crooke, Sir J. Smedley
Little, J.
Strauss, H. G. (Norwich)


Crookshank, Capt. Rt. Hon. H. F. C.
Llewellin, Colonel J. J.
Strickland, Captain W. F.


Cross, R H.
Lloyd, G. W.
Stuart, Rl. Hon. J. (Moray and Nairn


Crowder, J. F. E.
Loftus, P. C.
Taylor, C. S. (Eastbourne)


Cruddas, Col. B.
Mabane, W. (Huddersfield)
Thorneycroft, G. E. P.


Culverwell, C. T.
McCorquodale, M. S.
Thornton-Kemsley, C. N.


De Chair. S. S.
Macdonald, Capt. P. (Isle of Wight)
Titchfield, Marquess of


Denman, Hon. R. D.
McEwen, Capt. J. H. F.
Tufnell, Lieut.-Commander R. L.


Danville, Alfred
MeKie, J. H.
Turton, R. H.


Despencer-Robertson, Major J. A. F.
Maclay, Hon. J. P.
Wakefield, W. W.


Dodd, J. S.
Macmillan, H. (Stockton-on-Tees)
Walker-Smith, Sir J.


Drewe, C.
Manningham-Buller, Sir M.
Ward, Lieut.-Col. Sir A. L. (Hull)


Dugdale, Captain T. L.
Margesson, Capt. Rt. Hon. H. D. R.
Ward, Irene M. B. (Wallsend)


Duncan, J. A. L.
Markham, S. F.
Waterhouse, Captain C.


Dunglass, Lord
Maxwell, Hon. S. A.
Watt, Lt.-Col. G. S. Harvie


Elliot, Rt. Hon. W. E.
Mellor, Sir J. S. P. (Tamworth)
Whiteley, Major J. P. (Buckingham)


Ellis, Sir G.
Mills, Major J. D. (New Forest)
Wickham, Lt.-Col. E. T, R.


Emrys-Evans, P. V.
Moore, Lieut-Col. Sir T. C. R.
Williams, Sir H. G. (Croydon, S.)


Entwistle, Sir C. F.
Moreing, A. C.
Windsor-Clive, Lieut.-Colonel G.


Errington, E.
Morgan, R. H. (Worcester, Stourbridge)
Winterton, Rt. Hon. Earl


Evans, Capt. A. (Cardiff, S.)
Morrison, G. A. (Scottish Univ's.)
Wise, A. R.


Evans, D. O. (Cardigan)
Morrison, Rt. Hon. W. S. (Cirenoester)
Womersley, Sir W. J.


Evans, E. (Univ. of Wales)
Muirhead, Lt.-Col. A. J
Wragg, H.


Everard, Sir William Lindsay
Munro, P.
Wright, Wing-Commander J. A. C.


Fleming, E. L.
Nall, Sir J.
York, C.


Furness, S. N.
Neven-Spence, Major B. H. H.
Young, A. S. L. (Partick)


Fyfe, D. P. M.
O'Connor, Sir Terence J.



Gilmour, Lt.-Col. Rt. Hon. Sir J.
Orr-Ewing, I. L.
TELLERS FOR THK NOES.—


Gledhill, G.
Palmer, G. E. H.
Major Sir James Edmondson and Lleut.-Colonel Herbert.


Gluckstein, L. H.
Peake. O



Question put, and agreed to.

Schedule agreed to.

Bill reported, with Amendments; as amended, to be considered upon Thursday, and to be printed. [Bill 164.]

IMPORT DUTIES (IMPORT DUTIES ACT, 1932).

ROLLING MILL MACHINERY.

10.6 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Cross): I beg to
move,

That the Additional Import Duties (No. 4) Order, 1939, dated the twenty-second day of May, nineteen hundred and thirty-nine, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said twenty-second day of May, nineteen hundred and thirty-nine, be approved.
This is an Order to increase from 20 per cent, to 33½ percent. the ad valorem duty on certain kinds of rolling mill machinery which are set out in the Order. The revival in recent years in the United Kingdom iron and steel industry and the development of rolling mills have led


to an increase in the demand for rolling mill machinery. In the past, for upwards of a century, in the days prior to the War, the United Kingdom heavy engineering industry held a commanding position in the design and production of rolling mill machinery, but after the War, in the time of depression in the iron and steel industry, they lost ground at a period in which rapid progress was being made in the United States of America and in Germany. When the revival set in a few years ago the United Kingdom industry responded and made substantial progress in expanding and modernising their plant, and they are now able to supply machinery which is competitive with foreign products both in design and in construction, but they are faced by foreign competitors who have established a firm hold in this country by virtue of the reputation which they have established in recent times for superior design and greater experience in this type of machinery, and in some cases they quote prices which suggest either that they are subsidised or that the concerns selling in this country are willing to sell at a loss for the purpose of maintaining their hold on this market. This applies particularly to German competition, which has supplied an unusually large volume of imports in the first three months of this year. The German imports in this period of rolling mill machinery were 58 per cent. by weight and 75 per cent. by value above the corresponding figures for the same period last year.
On the non-ferrous side, a substantial development is now occurring in the rolling of special aluminium and magnesium light alloys for armament purposes, and valuable orders have recently been placed in. Germany for mills which could have been made in this country. The mill rolling industries are safeguarded against possible interference or hampering of their development by Section 10 of the Finance Act, 1932, under which the Import Duties Advisory Committee has power to recommend the importation of machinery free of duty, or at a reduced rate, in cases where similar machinery is not obtainable in this country. The Import Duties Advisory Committee state that they propose to continue to use this power. The case for the increased duty is very fully set out in the White Paper, and I think the House is fully seized of the desirability of

maintaining a strong and efficient industry in this country for the supply of this machinery. The industry is equipped to play its part, but this increased duty is necessary, in the first place to enable it to regain its hold on the home market, and, secondly, to put it on a remunerative basis from which it can make attacks on foreign markets and hope to regain them.

Mr. Alexander: What representations, if any, have been made by the owners of rolling mills about this? There is not a single reference in the White Paper to the actual users of the rolling machines.

Mr. Cross: I have no information of any representations made by the users of the machinery.

Mr. Alexander: I do not propose to ask my hon. Friends to divide against this Resolution, but there are one or two points to which I should like to draw attention. At the bottom of page 4 of the White Paper it says:
We regard it as essential that there should be no serious hindrance placed in the way of the metal working industries obtaining the most up to date and most efficient machinery wherever produced.
Anyone who represents an iron and steel centre knows how important it is that the spirit of that phrase should be carried through. In the next paragraph it says:
We are, however, empowered under Section 10 of the Finance Act, 1932, to recommend the grant of a licence to import machinery at a reduced rate of duty, or free of duty, in cases where similar machinery is not obtainable in this country and we have used this power freely in cases where we have been satisfied that there was a substantial difference between the foreign machines it was desired to import and any which were obtainable in this country.
While it is very essential that the actual users of machinery of this kind should be able to make the most efficient use of the machinery available, I am bound to say that my experience so far is that, when we ask for a special licence to import machinery which is requisite for obtaining efficient production, it often takes the Import Duties Advisory Committee from 12 months to two years. The Parliamentary Secretary ought to give us some assurance before we give him a vote of this kind that, where it is necessary to apply for a licence to import something that is really necessary for the efficiency of the industry, we ought to be able to get it without waiting 12 months or two years.

Mr. Cross: I have not looked into that point. I can only give my undertaking that I will do so and I will bring to the attention of the Import Duties Advisory Committee the remarks that the right hon. Gentleman has made.

10.14 p.m.

Sir R. Acland: I should like to ask the Parliamentary Secretary to explain more fully how he makes out that the figures rather confusedly given in this Paper support the case that he is making. I would draw attention to the figures at the bottom of page 3. It would have been more convenient if they had been put down alongside and at the right-hand of the figures in the table a little higher up. They show that the imports of machinery in 1937 were £853,000, on which one-half, as we see from the next paragraph, was imported free of duty under licence. One-half consisted of machinery not manufactured in this country, that is to say, only some £400,000 represented machinery that was competitive with British machinery. In the next year the imports went down to £435,000, of which one-third was not competitive, leaving some £300,000 competitive.
Comparing these figures as amended —and I think I am right in amending them in this way—with the figures given on page 3, and doubling the last figure of £442,000 because it represents only six months, we find that in the last four years, to the nearest £50,000, British production has been £400,000, £400,000, £700,000 and £900,000, while the foreign importation of competitive machinery has been £200,000, £250,000, £400,000 and £300,000. In other words, British production in those years has increased by 150per cent., whereas foreign importation has increased by 50 per cent. I would like the Minister to tell us how, on these figures, he sustains his case that the industry is meeting tremendous, overpowering, cut-throat, subsidised competition which is likely to drive it out of existence if we allow things to go on as they are. On the contrary, it seems to me that the industry is doing very nicely, and is expanding rapidly, and I cannot see how the Minister is justified in bringing before us something which simply has the effect of enabling the industry to increase by roughly 13 percent. the prices it is able to charge for its products.

10.18 p.m.

Mr. J. J. Davidson: I think the admission which the hon. Gentleman has just made to us indicates exactly the state in which the Government are as regards their industrial policy. The figures contained in this White Paper should be placed on record, because the White Paper itself is an interesting commentary on the way in which the Government have allowed our home industries to deteriorate during their reign, while importation has gone up tremendously, assisting foreign markets that have been continually opposed to us, not only economically, but in building up armaments against the rearmament policy of this country. On page 3 of the White Paper we are told frankly and bluntly the extent to which foreign suppliers of rolling mill machinery have made progress in the United Kingdom market during the recent period of activity. The statistics given show the Government up as an inept Government so far as the trade and industry of the country are concerned. In 1934, the imports of this class of machinery were £99,000. They rose in 1935 and 1936, until in 1937 they amounted to £853,000. During this period, when our exports were deteriorating and our imports increasing to a tremendous figure, against the best interests of the whole community, this Government has been in power, with its industrialists, its financial magnates, and a majority that no other Government has enjoyed for many years. The White Paper is an indication that the Government, apart from policy, have to resort always to the bolstering up of industries in this country by financial methods which can be seriously questioned, and the sooner they get back to a proper perspective of trading relations in foreign markets the better it will be for the general community of the country.

10.20 p.m.

Mr. Cross: The hon. Member for Barnstaple (Sir R. Acland) asked me one or two questions. If he had read further he would have seen that the very large imports in 1937 to which he referred—and this must apply also to the large output in this country—reflected the very rapid development which took place in the steel industry during that period, including the Ebbw Vale works. It is quite evident that the Advisory Committee are of opinion that the demand for this type of machinery will now come


back to normal. Indeed they say that these conditions have now passed and it is probable that the demand for this type will substantially remain at a lower level than has obtained. That seems to me to answer the hon. Member's question.

Resolved,
That the Additional Import Duties (No. 4) Order, 1939, dated the twenty-second day of May, nineteen hundred and thirty-nine, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said twenty-second day of May, nineteen hundred and thirty-nine, be approved.

ZINC OR SPELTER.

10.22 P.M.

Mr. Cross: I beg to move,
That the Import Duties Substitution (No. 2) Order, 1939, dated the twenty-fourth day of May, nineteen hundred and thirty-nine, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said twenty-fourth day of May, nineteen hundred and thirty-nine, be approved.
This Order relates to the recent increase of the customs duty on unwrought zinc from 12s. 6d. per ton or 10 per cent. ad valorem, whichever is the less, to 30s. per ton, which is approximately 10 per cent, ad valorem at current prices. The circumstances in which the recommendation is made by the Import Duties Advisory Committee are fully described in the White Paper, and perhaps it would suffice, therefore, for me to go over the ground outlined in the White Paper in abbreviated form. This increased duty is one of a number of proposals which were made by the Import Duties Advisory Committee in a report of February this year for amending the arrangements introduced in 1935. The main proposals are, first, that the Empire producers are to pay 10s. in cash to the Imperial Smelting Corporation in respect of each ton of zinc imported and sold by them in the United Kingdom; second, that the Corporation shall co-operate in making a payment of 5s. a ton on production into a fund for the payment of a rebate in respect of exported goods containing zinc; third, that the production of zinc metal by the Imperial Smelting Corporation is not to exceed 60,000 tons a year; fourth, that the price of Empire electrolytic brands of zinc of a purity of 99.9 per cent., up to, but not including, 99·ent. shall not exceed £3 per ton above

the mean of the London Metal Exchange spot and forward quotations.
The duty of 12s. 6d. a ton on foreign zinc was imposed on the recommendation of the Advisory Committee in 1935. It was then hoped that international regulations might be made for the control of supply in relation to consumption. Those hopes were not realised, and the continuing low price of zinc, coupled with the increased cost of production, had a serious effect on the Imperial Smelting Corporation. In 1936, the Corporation applied for a higher rate of duty on foreign imports, in order to establish a more satisfactory price level in this country. The Advisory Committee considered that the position could not be met by a higher duty alone, and suggested the possibility of an Empire agreement as a first step. Unfortunately, a satisfactory basis of agreement could not be found, and in 1937, following an inquiry by the Committee of Imperial Defence, the Advisory Committee were asked to use their good offices to promote discussions between the United Kingdom and Empire producers, with a view to an agreement being reached in respect of prices in this country. The Advisory Committee reported that the Empire producers, recognising the position of the home industry, put forward these proposals as the best method of dealing satisfactorily with the position.
The Empire producers agreed that an effort should be made concurrently to re-form the international cartel on a basis having for its object the stabilisation of the price of zinc at from £14 to £16 a ton. The House will perceive that in broad outline the scheme is that the duty should be raised by 17s. 6d. a ton on foreign zinc, bringing it up to the level which is roughly equivalent to 10 per cent. ad valorem, that the Empire producers should pay, and in effect subsidise, the Imperial Smelling Corporation to the extent of 10s. a ton on what they sell here in this market, and further, that under this increased duty they should co-operate with the Imperial Smelting Corporation in paying to the United Kingdom consumers 17s. 6d. per ton on the zinc content in exported manufactured goods. It is in fact a voluntary drawback scheme. The Committee have gone carefully into the effect of the increased duty on the cost of manufacture of goods, and they are satisfied that the effect should


be small in relation both to the total cost of the great bulk of these goods and to the actual tariff protection which already exists. They say, however, that they would be prepared to take the new situation into account in considering any application that might be made.
As to the export rebate scheme, a substantial body of consumers have agreed to co-operate in its administration.

Mr. Alexander: Who are they?

Mr. Cross: As far as I am aware there is no particular body of consumers, but the producers are at the present time in discussion with the consumers as to the details of the scheme.

Sir P. Harris: The smelting industry has opposed the scheme.

Mr. Cross: A large body of them have agreed to co-operate in its administration. The hon. Gentleman will find that in the White Paper itself, and I am certainly correct in saying that they are at present engaged in discussion upon its administration. The Committee say that they do not consider that the new arrangements should materially affect the functions of the London Metal Exchange. The new scheme has been agreed to by the Governments of Canada and Australia, and the Norwegian and Polish Governments, with whom we have commercial agreements under which the duty should not exceed 10 per cent. ad valorem, have also agreed. The industry gives direct employment to some 2,200 people, and indirectly to considerably more.

Mr. Alexander: Have the Government come to any agreement with the Belgian Government about it?

Mr. Cross: I am not aware that there is any commercial agreement with the Belgian Government affecting zinc, or that an agreement with the Belgian Government is necessary.

Mr. Alexander: They are the principal exporters.

Mr. Cross: I am speaking of the employment which the industry gives directly to 2,200 people, and indirectly to considerably more, because it is a very large user of coal. It takes something like four tons of coal to each ton of metal produced, which gives a figure of the order of 250,000 tons in recent years, and the industry gives further employment in plant and maintenance of

plant. the Committee state that the Imperial Smelting Corporation have new plant and new processes, that they are up to date, and that they are efficient. They have examined their costs of production in detail and they are satisfied that assistance of this order is necessary to the maintenance of the Corporation with the present level of prices. In these circumstances, I recommend the Order to the favourable consideration of the House.

10.30 p.m.

Mr. Alexander: The Parliamentary Secretary in his last words hoped that the House would approve the Order. I hope that it will not. The more I study this report and the more I listen to the Parliamentary Secretary the more I fail to understand how this can be in the interests of industry as a whole or in the interests of Defence. May I take the Defence part first? The actual figures of imports and of home production are to be found on page 5. Out of a total consumption of about 220,000 tons, we at present have about 50,000 tons of home production, and one of the rewards for asking the taxpayer to take the burden of this extra duty, we are restricting British home production, there is to be no advance on the 60,000 tons, while the duty on foreign is to be advanced from 12s. 6d. to 30s. per ton. If this matter has been considered and approved by a sub-committee of the Committee of Imperial Defence what is the great advantage of it? We shall still be dependent, after we have put up the duty from 12s. 6d. to 30s., for a total of 200,000 tons, although our home production is to be strictly limited by the usual type of back-scratching agreements which always spring up under any general tariff system. The more I look at the other details the more I feel inclined to ask my hon. Friends to vote against it.
It is admitted that you are dealing with a very important raw material for other forms of metal and engineering industries, and any steep increase in the price of this raw material is of great importance to them. It may be that under the agreement there is to be a voluntary drawback scheme in respect of exports, but that is no remedy for the actual manufacturer who is using zinc as a raw material, and who is not in the export business. He will have to pay any way. I speak rather feelingly because I know many people who use this raw material who


have no export market; they will have to meet the whole cost on this increase in their raw material in finally assessing their cost to the consumer. There are many sections of the trade who are opposing this advance in duty. There are the chemical manufacturers, the galvanisers, the British steel wire industry, the Ever-Ready Company, the paint colour and varnish manufacturers, Stewarts and Lloyds, a whole range of manufacturers who are obviously going to find it exceedingly inconvenient to have to meet the extra cost which will be incurred.
Look also at the aspect of this matter in relation to the Ottawa Agreement. It was explained to us at some length in 1935 how this position had to be met from the point of view of the Empire producer. What is the situation now? As far as I could gather from the Parliamentary Secretary, the Imperial Smelting Corporation is the only body concerned in home production to any extent, and whatever help is to be brought to the smelting industry is to be brought to one company or association of companies. [Interruption.] I will leave that to my hon. Friend to deal with if he wishes to do so, but there is a former Member of the House now in another place, who was well known in business circles and who is the chairman of the Imperial Smelting Corporation. This is an extraordinary arrangement. We are being asked to-night to put up the duty from 12s. 6d. to 30s. a ton on foreign imports. The Empire producers, who are sending to this country rather more than one-half of our total consumption, then enter into a voluntary agreement by which, provided that the House will put up the duty from 12s. 6d. to 30s., they will agree to pay a special voluntary subsidy of 10s. a ton for every ton produced by the Imperial Smelting Corporation. I even gathered from the Parliamentary Secretary that this agreement was induced by the Import Duties Advisory Committee. I rather gathered from what the hon. Gentleman said that the effect of the duty alone being passed by the House would not bring sufficient improvement to the Imperial Smelting Corporation, and that, therefore, the Import Duties Advisory Committee tried to get this agreement with the Empire producers by which the Empire producers would pay a subsidy as well.

Mr. Cross: The tariff on foreign zinc only, they said, would be quite insufficient, and it was necessary to get a wider agreement.

Mr. Alexander: Was there any proposal for a smaller tariff than 30s. before this agreement with the Dominion producers? The Parliamentary Secretary is unable to answer that. It is obvious from what he said that it was on the initiative of the Import Duties Advisory Committee that an agreement was sought by which the Empire producers would subsidise the home producers by 10s. a ton. Now it seems that it was not a question of having a bare amount of tariff put on, but there had to be an increase of tariff which would so help the Empire producer that he could afford to pay 10s, a ton subsidy to the British home producer, and still pocket the balance. Therefore, in return for the 10s. a ton which he is going to pay, as an Empire producer, to the home producer, he will get a further 17s. 6d. out of the home taxpayers. That is an extraordinary state of affairs. But the Empire producer does something more. He says that he will give this 10s. a ton to the home producer only if the House of Commons insists on the duty being increased by 17s. 6d., but that in any case he will not pay it unless we pledge ourselves that British production will never exceed 60,000 tons. That seems to me to be a most extraordinary arrangement. It is pretty bad. It is a round-the-table deal by people who know best how to use the fiscal authorities throughout the world for private purposes.
I could speak at great length on this, but I want only to give the facts. These being the circumstances, I feel certain that my hon. Friends, who approach these matters not on the basis of a century-old academic, cut-and-dried theory, but on their merits, will divide against this Order. Here is a case in which obviously, as distinct from the previous Order, the House is being asked to approve something where there is no finality and no guarantee of a steady improvement of British industry. They are being asked, not to improve British production for Defence purposes, but to put a limit on it, and they are being asked to make a deal as between the taxpayers and the Empire producer which takes more from the home taxpayers than is actually needed for the Empire producer to get his benefit.


I think that is a very bad business. We have had considerable trouble from time to time in dealing with the various details of Civil Defence. One of the things in which most of us who think about A.R.P. are interested, is the type of shelter to be used. The Government think the only practical type is the shelter which is blast and splinter proof. In that connection, we have great use for galvanised sheets, and this proposal will add to the cost of those sheets. It will add to the costs of those firms who have been providing shelters of that kind in connection with air-raid precaution work as against the cheaper cost of the asbestos type of shelter, which is in competition with the galvanised type. Thus, from the point of view of Civil Defence also, this proposal seems to be unwise. The Imports Duties Advisory Committee wrote a very long letter to the President of the Board of Trade explaining the situation. All I can say is that, on this occasion, they have not convinced me. I hope they will not convince the House, and that the House, instead of approving of the duty, will send it back to the Import Duties Advisory Committee for reconsideration.

10.42 p.m.

Sir R. Acland: We have here, in the plausible words of the Minister, a small step, but a new step in the very rapid march which is taking place, away from the system of private enterprise and free competition, which hon. Members opposite are supposed to defend, towards complete monopoly. We are establishing a new principle. We are getting away from the idea of the efficient manufacturer making high profits, the justification for the profits being that he undertakes risks, including the risk that if he is inefficient, he will make not a profit but a loss. All that has gone. To-day we fix prices which will return a satisfactory profit to those who have already invested money in an industry, while making arrangements which will prevent any new people coming into the industry. On page 4 of the White Paper we find this:
It had been hoped that the removal of the difficulties caused by the special provisions of the Ottawa Agreements, the ground would be cleared for the completion of international arrangements for the regulation of production in relation to consumption, in order that a satisfactory price level might be

established, but progress in this direction presents great difficulties, due in part to the actual and potential expansion of production in a number of countries.
That sounds well, but what it really means is "the international arrangement which it was proposed to make so that the producers would be able to keep the consumers just short enough of supplies to make sure of satisfactory prices." The only trouble has been that one or two people in one or two countries would like to produce at a lower cost and somehow that has to be avoided. I would draw attention to certain words from a very careful speech delivered by the leader of my own party:
Where conditions, of free competition have been irretrievably replaced by conditions of monopoly, those who direct the industry and make the decision as to price and output, should be the servants of the community rather than the servants of the capital invested in the monopolists industry.
Hon. Members opposite, by this sort of legislation, are digging the grave of those principles of industrial organisation which they are supposed to support. There is something rather more serious in this White Paper. I draw attention to the words on page 6 where the committee state that they were asked by the Minister for the Co-ordination of Defence to use their good offices to promote discussion between the United Kingdom and other Empire producers with a view to some agreement between them as to sales in this country. They go on:
We are glad to report that we were successful in bringing the producers together, and we desire to pay a tribute to the spirit in which"—
And so it goes on. But is that one of the functions of the Import Duties Advisory Committee? It was set up by this House and its salaries and the salaries of its staff are paid out of moneys provided by Parliament for certain purposes laid down by Parliament in the Import Duties Act, 1932. It is there stated:
For the purpose of giving advice and assistance in connection with the discharge by the Treasury of their functions under this Act there shall be constituted a Committee.…The Committee shall from time to time take into consideration representations which may be made to them with respect to matters on which, under this Act, any action may be taken by the Treasury. and may make recommendations with respect to the matters aforesaid.
Those are the only functions of this Committee which I can find in that Act. It


is nowhere laid down that they are to act in the capacity of an international cartel-fixing organisation, but they are performing this function, which may be extremely useful to the monopolists of Britain, Canada and Australasia, which may be extremely useful to the shareholders, but they are doing it with money provided by Parliament for other purposes. I seriously submit to hon. Members who may be members of the Public Accounts Committee that they should seriously challenge whether it is proper for the Import Duties Advisory Committee, with money provided in this way, to act as cartel brokers to all the metal monopolists all over the world and try to fix up arrangements by which they can get better and bigger prices out of the consumers of zinc.
Of course, the agreements entered into at Ottawa have been surreptitiously swept on one side by the processes of the Import Duties Advisory Committee in relation to zinc. The duties were originally 10 per cent. The Ottawa Agreements provided that the Empire producers would supply the British demands at world price. The duty was then lowered from 10 per cent. to 12s 6d., which is roughly 3 per cent., and in consideration of that lowering of duty Empire producers were relieved of the obligation which they had undertaken at Ottawa. Now we have put up the duty to 10 per cent. without any mention of reimposing this obligation to supply zinc to the British market at world prices, which would upset the whole scheme. Apart from there being no obligation to keep the price down, the scheme requires that it be kept up for the purpose of paying £100,000 in subsidy—not, as we have done before, to those engaged in shipping of all kinds, to those engaged in the production of wheat or any particular commodity, but in order to pay a direct subsidy to a private corporation. It is the very substantial one of £2 a ton on their production, amounting to £100,000 a year, which is 50 per cent. of the total trading profit of the corporation. This is going to increase their trading profit by 50 per cent. Of course, £100,000 per annum represents some £3,000,000. That is the size of the gift.

Mr. Cross: I cannot see on what the hon. Member bases his figures.

Sir R. Acland: I think their report shows a trading profit in the neighbourhood of £200,000, and we are giving them £100,000. The Minister does not dispute the £100,000, nor that that is £2 a ton on their output. If he disputes then-trading profit then it may be I am wrong, but I have done my best to be right. Nor have we yet reached the limit of what is going to be done, because that is clearly anticipated on page 7. All this is done in order to fix up an international cartel which is going to run the price very much higher than the present £2 a ton additional which this Measure is to give British manufacturers. It is stated on page 7 that in the event of the London Metal Exchange price rising above 18 the payments to the Imperial Smelting Corporation by the Empire producers will be reduced by 2s. 6d. for every £1 rise above that point. Two and sixpence for every £1 means that the payment at 10s. a ton will be wiped out in a £4 rise. For all these reasons I hope that this Order will be rejected by the House.

10.51 p.m.

Mr. M. Samuel: I have listened very carefully to the speeches made from the opposite Benches and they show an absolute want of feeling for the thousands of men who are employed in this industry. They show no concern whatever over the danger that the 60,000 tons which are at present being dealt with in this country might be reduced to nothing, owing to the very small profits, as they were in past times.

Mr. Alexander: May I ask the hon. Member to inform us exactly when this industry was down to nothing?

Mr. Samuel: Nothing, or to very small proportions. I have not the figures by me.

10.52 p.m.

Mr. Dalton: I want to ask the Minister to explain one or two matters that were referred to by my right hon. Friend, and which I should like to underline. Why is it, if it is desired from the point of view of defence to build up this industry, that a limit of 60,000 tons is to be imposed upon the whole production, having regard to the fact that in three out of the last four years the production has been above that figure. The hon. Member for Putney (Mr. M. Samuel) has spoken about employment. On what grounds can he defend a limitation of the amount of


employment to be provided in this industry by imposing a limitation on the output notably below the output figures for three out of the last four years, particularly having regard to the fact that there are references here to modernisation of plant, as a result of which there will be labour-saving devices introduced and the number of persons employed will be reduced? Why is there deliberate limitation in the home production of a commodity which is necessary for defence?
Secondly, there have been various arithmetical calculations made, but the case is worse than the hon. Member for Barnstaple (Sir R. Acland) suggested, twice as bad as he suggested—because he was basing his calculations on the assumption that this bill which is to be paid by the Dominions across the seas to Lord Home and his associates of the Imperial Smelting Corporation is based upon the home production—10s. per ton of home production. This is based upon the Empire importation, and when the economics of this scheme have got into working order—the economics of Colney Hatch one of my hon. Friends said under his breath when the hon. Gentleman was explaining it—the Empire importation will be at least double the home production. If there is to be paid this dole from overseas to the Imperial Smelting Corporation of 10s. per ton it will be 20s. per ton approximately in respect of home production, if not more. I would ask whether there is any precedent in the long and varied history of these import orders for a scheme of this sort to be entered into in advance as part of the case for a new import duty. Perhaps the hon. Gentleman will give some further reply on this point.

10.56 p.m.

Mr. Cross: All hon. Members who have spoken in opposition to this Order have ignored what I think is a clear fact, that the maintenance of this industry is desirable in the national interest. The Committee of Imperial Defence have made it clear that they desire this industry, the Imperial Smelting Corporation, to be run for purposes of defence. Hon. Members are aware that the Committee of Imperial Defence can never state their reasons which cause them to arrive at their conclusions. It is obvious that international relations would be made incomparably difficult otherwise, and

worse than they are at the present time. The hon. Member for Bishop Auckland (Mr. Dalton) asked particularly why there should be a limitation. It. would be extremely unreasonable, where you have an uneconomic industry, to stipulate as a condition of agreeing to a scheme of this kind that there should be no limitation. This plan is brought forward for the advantage of the industry and for purposes of defence.

Sir P. Harris: The hon. Gentleman has said that the industry is uneconomic. Does he build up his case on that?

Mr. Cross: Certainly. This industry would not survive without aid of some sort, and this is the particular remedy which I am recommending the House to take. The right hon. Member for Hills-borough (Mr. Alexander) said that Empire producers were to be given 17s. 6d., and in return were going to pay 10s., but he ignored that they will pay 15s., because there is a further 5s. in respect of rebate. This leaves a half-crown. The figures are in any case rough and theoretical, but I am forced to make the right hon. Gentleman a present of this theoretical half-crown. Considerable play was made by the hon Member for Barnstaple (Sir R. Acland) with the argument that we were establishing a monopoly, but I cannot understand for one moment how the Imperial Smelting Corporation can enjoy a monopoly in this country. So far as the foreign product is concerned, it pays a small duty, and although a trade may shelter behind a 10 per cent. duty that is not a monopoly. And surely it is inconceivable that the Empire producers, in bringing forward these proposals, have given the Imperial Smelting Corporation a monopoly when they are going to operate in this country against the Empire producers. The fact that the Empire producers made these proposals is sufficient answer to the hon. Gentleman who said that the Corporation would enjoy a monopoly.
The hon. Member produced some figures. I have figures of my own here, and they are much nearer the mark than his. The Empire imports were 108,000 tons in 1938 which gives us a figure of £54,000, and not of £200,000. From that sum has to be deducted the further figure of £15,000 in respect of the contribution made by the Imperial Smelting Corporation to the payment of rebate. I think


the hon. Member must have been making the calculation on the basis employed by free traders, which includes the amount of the tariffs,

Sir R. Acland: No, from the "Financial News."

Mr. Cross: Then I cannot accept the "Financial News." The only other point that he made was with regard to large profits made by the Imperial Smelting Corporation. They have paid no

ordinary dividend since 1930, except for the year ended 30th June, 1937, when 5 per cent. was paid.

Question put,
That the Import Duties Substitution (No. 2) Order, 1939, dated the twenty-fourth day of May, nineteen hundred and thirty-nine, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said twenty -fourth day of May, nineteen hundred and thirty-nine, be approved.

The House divided: Ayes, 186; Noes, 117.

Division No. 186.]
AYES.
[11.2 p.m.


Acland-Troyte, Lt.-Col. G. J.
Gridley, Sir A. B.
Peake, O.


Adams, S. V. T. (Leeds, W.)
Grimston, R. V.
Perkins, W. R. D.


Albery, Sir Irving
Guest, Lieut.-Colonel H. (Drake)
Petherick, M.


Allen, Col. J. Bandsman (B'knhead).
Guinness, T. L. E. B.
Radford, E. A.


Allen, Lt.-Col. Sir W. J. (Armagh)
Gunston, Capt. Sir D. W.
Raikes, H. V. A. M.


Anderson, Rt. Hn. Sir J. (Sc'h Univ's)
Hambro, A. V.
Ramsbotham, Rt. Hon. H.


Aske, Sir R. W.
Hammarsley, S. S.
Rankin, Sir R.


Baillie, Sir A. W. M.
Hannah, I. C.
Rathbone, J. R. (Bodmin)


Baldwin-Webb, Col. J.
Heilgers, Captain F. F. A.
Reed, A. C. (Exeter)


Balfour, G. (Hampstead)
Hely-Hutchinson, M. R.
Reed, Sir H. S. (Aylesbury)


Beamish, Rear-Admiral T. P. H.
Heneage, Lieut.-Colonel A. P
Reid, W. Allan (Derby)


Beauchamp, Sir B. C.
Hepburn, P. G. T. Buchan-
Renter, J. R.


Beaumont, Hon. R. E. B. (Portsm'h)
Herbert, Lt.-Col. J. A. (Monmouth)
Robinson, J. R. (Blackpool)


Bossom, A. C.
Hogg, Hon. Q. McG.
Ropner, Colonel L.


Boulton, W. W.
Holmes, J. S.
Rosbotham, Sir T.


Boyce, H. Leslie
Horsbrugh, Florence
Ross, Major Sir R. D. (Londonderry)


Bracken, B.
Hudson, Capt. A. U. M. (Hack., N.)
Ross Taylor, W. (Woodbridge)


Broadbridge, Sir G. T.
Hulbert, Squadron-Leader N. J.
Rowlands, G.


Brooke, H. (Lewisham, W.)
Hume, Sir G. H.
Royds, Admiral Sir P. M. R.


Brown, Brig.-Gen. H. C. (Nawbury)
Hunter, T.
Ruggles-Brise, Colonel Sir E. A.


Bull, B. B.
Hutchinson, G. C.
Russell, Sir Alexander


Burgin, Rt. Hon. E. L.
Jarvis, Sir J. J.
Salmon, Sir I.


Butcer, H. W.
Jennings, R.
Samuel, M. R. A.


Campbell, Sir E. T.
Joel, D. J. B.
Sanderson, Sir F. B.


Cary, R. A.
Jones, L. (Swansea W.)
Sandys, E. D.


Chapman, A. (Rutherglen)
Kimball, L.
Selley, H. R.


Clarke, Colonel R. S. (E. Grinstead)
Lamb, Sir J. Q.
Shakespeare, G. H.


Cobb, Captain E. C. (Preston)
Law, R. K. (Hull, S.W.)
Shepperson, Sir E. W.


Cook, Sir T. R. A. M. (Norfolk, N.)
Lees-Jones, J.
Smith, Sir R. W. (Aberdeen)


Cooke, J. D. (Hammersmith, S.)
Leech, Sir J. W.
Somervell, Rt. Hon. Sir Donald


Courthope, Col. Rt. Hon. Sir G. L.
Liddall, W. S.
Southby, Commander Sir A. R. J.


Cox, H. B. Trevor
Lindsay, K. M.
Spens. W. P.


Craven-Ellis, W.
Little, J.
Stourton, Major Hon. J. J.


Crooks, Sir J. Smedley
Llewellin, Colonel J. J.
Strauss, H. G. (Norwich)


Crookshank, Capt. Rt. Hon. H. F. C.
Lloyd, G. W.
Strickland, Captain W. F.


Cross, R. H.
Loftus, P. C.
Stuart, Rt. Hon. J. (Moray and Nairn)


Cruddas, Col. B.
Mabane, W. (Huddersfield)
Taylor, C. S. (Eastbourne)


Culverwell, C. T.
MoCorquodale, M. S.
Thorneyoroft, G. E. P.


Davies, C. (Montgomery)
Maconald, Capt. P. (Isle of Wight)
Thornton-Kemsley, C. N.


Denman, Hon. R D.
McEwen, Capt. J. H. F.
Titchfield, Marquess of


Denville, Alfred
McKie, J. H.
Tryon, Major Rt. Hon. G. C.


Dodd, J. S.
Maclay, Hon. J. P.
Tufnell, Lieut.-Commander R, L.


Donner, P. W.
Macmillan, H. (Stockton-on-Tees)
Turton, R. H.


Drewe, C.
Macnamara, Lieut.-Colonel J. R. J.
Wakefield, W. W.


Dugdale, Captain T. L.
Manningham-Buller, Sir M.
Walker-Smith, Sir J.


Duncan, J. A. L.
Margesson, Capt. Rt. Hon. H. O. R.
Ward, Lieut.-Col. Sir A. L (Hull)


Dunglass, Lord
Markham, S. F.
Ward, Irene M. B. (Wallsend)


Edmondson, Major Sir J,
Maxwell, Hon. S. A.
Watt, Lt.-Col. G. S. Harvie


Elliot, Rt. Hon. W. E.
Mellor, Sir J. S. P. (Tamworth)
Whiteley, Major J. P. (Buckingham)


Ellis, Sir G.
Mills, Major J. D. (New Forest)
Wickham, Lt.-Col. E. T. R.


Elliston, Capt. G. S.
Moore, Lieut.-Colonel Sir T. C. R.
Williams, Sir H. G. (Croydon, S.)


Emrys-Evans, P. V.
Moreing, A. C.
Windsor-Clive, Lieut.-Colonel G.


Entwistle, Sir C. F.
Morgan, R. H. (Worcester, Stourbridge)
Winterton, Rt. Hon. Earl


Errington, E.
Morrison, G. A. (Scottish Univ's.)
Wise, A. R.


Everard, Sir William Lindsay
Morrison, Rt. Hon. W. S. (Cirenoester)
Womersley, Sir W. J.


Fildes, Sir H.
Muirhead, Lt.-Col. A. J.
Wragg, H.


Fleming, E. L.
Munro, P.
Wright, Wing-Commander J. A. C.


Furness, S. N.
Nall, Sir J.
York, C.


Fyfe. D. P. M.
Neven-Spence, Major B. H. H.
Young, A. S. L. (Partick)


Gledhill, G.
Nicolson, Hon. H. G.



Gluckstein, L. H.
O'Connor, Sir Terence J.
TELLERS FOR THE AYES.—


Goldie, N. B.
Orr-Ewing, I. L.
Captain Waterhouse and Lieut.-


Gamer, Sir R. V.
Palmer, G. E. H.
Colonel Kerr.




NOES.


Acland, Sir R. T. D.
Hayday, A.
Pethick Lawrence, Rt. Hon. F. W.


Adams, D. (Consett)
Henderson, A. (Kingswinford)
Poole, C. C.


Adams, D. M. (Poplar, S.)
Henderson, J. (Ardwick)
Price, M. P.


Adamson, Jennie L. (Dartford)
Henderson, T. (Tradeston)
Richards, R. (Wrexham)


Adamson, W. M.
Hills, A. (Pontefraot)
Ridley, G.


Alexander, Rt. Hon. A. V. (H'lsbr.)
Hopkin, D.
Ritson, J.


Banfield, J. W.
Isaacs, G. A.
Roberts, W. (Cumberland, N.)


Barnes, A. J.
Jagger, J.
Robinson, W. A. (St. Helens)


Barr, J.
Jenkins, A. (Pontypool)
Rothschild, J. A. de


Batey, J.
Jenkins, Sir W. (Neath)
Seely, Sir H. M.


Beaumont, H. (Batley/td
Johnston, Rt. Hon. T.
Sexton. T. M.


Benn, Rt. Hon. W. W.
Jones, A. C. (Shipley)
Silverman, S. S.


Benson, G.
Jones, Sir H. Haydn (Merioneth)
Simpson, F. B.


Bromfield, W.
Kennedy, Rt. Hon. T.
Sloan, A.


Brown, C. (Mansfield)
Kirby, B. V.
Smith, Ben (Rotherhithe)


Burks W. A.
Lathan, G.
Smith, E. (Stoke)


Charleton, H. C.
Lawson, J. J.
Smith, T. (Normanton)


Cluse, W. S.
Leach, W.
Sorensen, R. W.


Cooks. F. S.
Lee,F
Stewart, W.J. (H'ght'n le-Sp'ng)


Collindridge, F.
Leslie, J. R.
Stokes, R. R.


Daggar, G.
Logan, D. G.
Summerskill, Dr. Edith


Dalton, H.
Lunn, W.
Taylor, R. J. (Morpeth)


Davidson, J. J. (Maryhill)
Macdonald, G. (Ince)
Thurtle, E.


Davies, S. O. (Merthyr)
McEntee, V. La T.
Tinker, J. J


Dobbie, W
McGhee, H. G.
Viant, S. P.


Dunn, E. (Rother Valley)
McGovern, J.
Walkden, A. G.


Edwards, A. (Middlesbrough E.)
MacLaren, A.
Watkins, F. C.


Edwards, Sir C. (Bedwellty)
Maclean, N.
Watson, W. McL.


Gardner, B. W.
Mander, G. le M.
Welsh, J. C.


Garro Jones, G. M.
Marshall, F.
Westwood, J.


Graham, D. M. (Hamilton)
Mathers, G.
White, H. Graham


Green, W. H. (Deptford)
Messer, F.
Wilkinson, Ellen


Greenwood, Rt. Hon. A.
Milner, Major J.
Williams, E. J. (Ogmore)


Grenfell, D. R.
Morrison, Rt. Hon. H. (Hackney, S.)
Williams, T. (Don Valley)


Griffith, F. Kingsley (M'ddl'sbro, W.)
Morrison, R. C. (Tottenham, N.)
Windsor, W. (Hull, C.)


Griffiths, G. A. (Hemsworth)
Noel-Baker, P. J.
Woods, G. S. (Finsbury)


Griffiths, J. (Llanelly)
Oliver, G. H.
Young, Sir R. (Newton)


Hall, G. H. (Aberdare)
Owen, Major G.



Hall, J. H. (Whitechapel)
Paling, W.
TELLERS FOR THE NOES.—


Harris, Sir P. A.
Parker, J.
Mr. Groves and Mr. Anderson.


Harvey, T. E. (Eng. Univ's)
Parkinson, J. A.

Resolved,
That the Import Duties Substitution (No. 2) Order, 1939, dated the twenty-fourth day of May, nineteen hundred and thirty-nine, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said twenty-fourth day of May, nineteen hundred and thirty-nine, be approved.

AGRICULTURAL MARKETING ACT, 1933.

11.10 p.m.

Mr. Cross: I beg to move,
That the Processed Milk (Import Regulation) Order, 1939, dated the first day of June, nineteen hundred and thirty-nine, made by the Board of Trade under the Agricultural Marketing Act, 1933,a copy of which was presented to this House on the twelfth day of June, nineteen hundred and thirty-nine, be approved.
We now come to an Order relating to processed milk. The purpose is to regulate the imports of processed milks namely, condensed milk, condensed skimmed milk, milk powder, butter milk powder and cream. Under the Milk Marketing Scheme there is a substantial surplus over the actual liquid consumption of milk which must be produced

every year in order to safeguard the liquid supply throughout the year. In the milk year 1937–38 28 per cent. of the total milk was surplus to requirements and was manufactured into butter, cheese, condensed milk, milk powder and cream, and the prices of milk for these products are very much lower than those of the liquid milk. Moreover, all the prices are pooled, so that the return to every farmer is directly affected by the sums obtained from milk used for manufacture.
The proportion of the milk produced which goes into processing is large. In 1937-38 more than half the manufacturing milk, or 15 per cent of the total sales of milk by contract in England and Wales, was used for the production of condensed milk, milk powder and cream. Processed milks constitute the largest market for surplus milk and they are also the most remunerative market. Its importance to the milk industry can hardly be exaggerated. Since 1933 we have had a voluntary control of imports from the principal foreign supplying countries, and imports have been gradually brought down. The Dominions suppliers were asked not to exceed their average shipments


or the year 1932–33, but in certain ases they have increased those shipments substantially. In 1938 the increased production in this country, coupled with the increased shipments from the United States and certain Dominions, resulted in a serious state of over-supply. Some of the price agreements then in existence broke down and others were in danger of breaking down, and producers in the United Kingdom were forced to sell at uneconomic prices. The outlook, moreover, was bad because there was a definite prospect of increased milk production and there were abnormally large stocks of processed milk on hand. This year an endeavour was made to reach agreement as regards an equitable division of the market between the principal suppliers, but the variations in the quantities shipped in recent years made a uniform statistical basis impossible, and, although some progress was made, the discussions, unfortunately, did not lead to general agreement. Owing, however, to the disorganised state of the market, some immediate action was necessary.
The allocation that has been made represents a reduction, in the case of condensed whole milk, of 34 per cent., skimmed milk 18 per cent., and milk powder 35 per cent., on the imports of 1938. The cream allocation is somewhat higher than imports in 1938, owing to the temporary decline in shipments from Eire, but the allocation for other products shows a reduction of something in the neighbourhood of 50 per cent. Except in the case of Eire, Denmark and the Netherlands, who control their exports, and probably also New Zealand, which is expected to do the same thing, the imports will be controlled by licences issued by the Board of Trade in proportion to each firm's import during the period 1st October, 1936, to 31st March this year. It is proposed to set up a National Processed Milk Conference composed of representatives of the United Kingdom, the Dominions, and such of the principal foreign countries as are willing to cooperate, together with Government observers, and to make arrangements for the representation of the views of consumers. They would arrange for the regulation of the supplies of processed milk to the United Kingdom from overseas, and aim at securing, in the interests of consumers and producers, an orderly

adjustment of supply and demand. This import control should, by regulating the quantity of competing milk products, make an important contribution towards maintaining the effective operation of the Milk Marketing Scheme.

11.18 p.m.

Mr. T. Williams: I regret that either the Minister of Agriculture or someone with knowledge of the Department and the facts and figures connected with milk and processed milk products is not here to deal with this Order, for, although the hon. Gentleman has made certain statements about the percentage of milk diverted to processed milk factories and so on, and the apparent effect on the farmers or on general milk prices, apparently he does not know too much about the intricacies of the subject, or he would know that, to the extent to which this Government, or any Government, try to establish an artificial industry in this country for processed milk products, they are consistently imposing a further burden on the consumers of liquid milk. The quantity of milk that goes through processes sells at a price much higher than that of liquid milk, which depresses the general price for milk, and it is the consumer of liquid milk who has to pay all the time. The hon. Gentleman has given us no figures, apart from the percentages diverted to the factories, to show what effect this is going to have on liquid milk prices, nor any idea of the effect on the general consumer. One recognises that during certain periods of the year, when the output of milk is very large, there must, with a standardised liquid milk consumption, be surplus quantities during those periods. But to the extent that we try to erect an artificial processed milk industry, we are imposing burdens on liquid milk consumers.
When our consumption of liquid milk is the lowest in Europe and our price is the highest, there must be something wrong with our liquid milk industry; and the mere restriction of imports is not going to solve the problem. There may be reasons for some kind of an Order, but this Order gives no indication of what the restrictions are likely to be. Once it has been approved by the House, the Board of Trade may at any time declare that imports of processed milk shall be reduced to 75 percent., 50 percent. or 25 percent.; and the House will have no


control. That is not the sort of legislation we should accept very readily. When the international conference determine the amount of milk going into any country, are they also able to say anything about the price? Many working-class families which find it impossible to buy liquid milk buy processed milk, thus giving the children a modicum of milk in some form which they would otherwise not be able to get. This Order is wholly unsuited to the situation.
If the Government want an Order of this description, they should give far more information on the details. Until the Minister tells us the intention of the Government with regard to the limitations they may impose on imported processed milk, I should hesitate to agree to the Order in the form in which it now stands. To introduce such a document in this way is not playing the game with the House of Commons. We do not want to do in respect of milk factories what we have done in respect of the bacon factories and sugar factories. We have subsidised the erection of sugar-beet factories, and now we have handed them over to a monopoly. As far as I can gather, these sugar factories, subsidised by the State, are working only half the time. The trouble with the bacon industry is the high cost of curing, because the factories are so small. We are already paying more for liquid milk than is paid in any other country, and our consumption per person is about half what it is in some other countries. Unless we pay more attention to that, we shall benefit neither the producers nor anybody else.

11.25 p.m.

Sir P. Harris: I confess considerable surprise that an Order of this kind is not sponsored by the Minister of Agriculture. Technically it comes under the Board of Trade, and I suppose that the Rules of the House can be satisfied by the Parliamentary Secretary being responsible. The Order has been issued over the signature of the President of the Board of Trade, but it is a matter that involves, and can only be justified by the needs and necessities of, agriculture. I am concerned as the representative of a very poor working-class district, which is at the present time, the House may be surprised to know, suffering from a considerable amount of unemployment and distress due to the special circumstances of to-day. Unfortunately, a very large percentage, if not

the majority, of my constituents largely depend upon processed milk, not because they prefer it, but because of its price and cheapness, and convenience in the absence of proper larder and food storage accommodation in their houses. Any increase in the price of processed milk inevitably will cause hardship to the poorest of the poor, the unemployed and people on the lowest scales of wages. To ask the House at this time of night, on this flimsy three-page pamphlet, to give powers to the Minister without any justification and without: any argument or case being put forward in the interests of agriculture, is hardly treating it with the respect that it deserves, and I must make my protest.

11.27 p.m.

Miss Wilkinson: We are accustomed to the present Government concerning themselves entirely with the interests of the producer and more and more leaving out of account the interests of the consumer. Various Members of the Government in their speeches have deigned, on occasion, to note that we need to do something to increase the fitness of the children of this country, but, in endeavouring to meet the interests of the farmers, a very serious attack has been made on the nutrition of the children in the poorer areas. The Minister has already pointed out the small amount of liquid milk that is consumed in this country. As a result of a survey in my constituency of Jarrow, taking even the middle-class people into account, it was found, before the introduction of the special cheap milk scheme, that the amount of milk consumed was less than half a pint per head of the population per week. Many of the children did not even know the taste of fresh milk. The problem of the poorest women is that' they cannot afford to buy the best quality full-cream processed milk. Each rise in price, even if it is only a halfpenny a pint, means that they have to buy an inferior product. Every one of these restriction schemes means an increase of prices to the consumer.
This attempt to protect the interests of the farmers means that the women who to-day cannot afford to buy fresh milk and are now buying full-cream tinned milk will in future be compelled to buy only half-cream mik. But what is to happen to the woman who at the present time is only just managing to get half-


cream milk? It means that she will buy skimmed milk, and the terrible thing about that is that the Ministry of Health has pointed out that skimmed milk has so low a percentage of milk fats that it is not fit to be given to children, and yet there will be many young children who do not come under the cheap milk scheme who will be obliged to have this milk which has practically no nutrition value whatever. In attempting to look after the farmers you may actually be increasing the amount of malnutrition among children. I ask the Minister to realise what this means. The report on the health of children points out the various deficiencies which result in their not getting fresh milk, or at any rate in not getting full cream milk. I feel that the Minister has not really taken this into consideration.
It is true that under the cheap milk scheme large numbers of school children get fresh milk, but one of the problems is the problem of the deficiencies of the under five, those who are out of the care of infant clinics and who are not yet under the cheap milk scheme of the schools. That is a very poor section of the people and nothing should be done to increase the cost of a vital food like milk to these children. I hope that we shall register our protest against the ill-effects of this Order.

11.32 p.m.

Sir Joseph Lamb: I think the House will be making a mistake in relying too much on the argument of the price of milk. It is not only a question of the price, it is a question of a market for home-produced processed milk. It is true that the price of liquid milk is much higher than it need be because the surplus milk has to be manufactured and sold here. If you are going to allow unrestricted imports of processed milk to come into this country it will have an effect on the market and there will be a danger of an increased charge being made for liquid milk. Consequently it is in the interests of those who are consuming liquid milk that this Order in regard to processed milk coming into this country is made. It is true that the consumption of liquid milk is less in this country than in any other. I regret it, but on the other hand it must be remembered that the consumption of butter and cheese is

greater here than in any other country in the world. I should like to see a greater quantity of liquid milk consumed, but the Order will assist the manufacturers of processed milk in this country and ensure that there will not be a greater strain upon the liquid market.

11.35 p.m.

Mr. David Adams: Everyone must by now be well convinced that the agricultural industry is one of the most lucrative in the country. The millions of pounds that are paid out of the national Exchequer into the pockets of the farmers makes that a certainty. From my experience of the farming industry, at all events in Northumberland and Durham, I say that it is a lucrative industry second almost to none in the country. The Government are entirely without conscience in the matter of still augmenting the profits of agriculture, and we can be certain that, as long as they remain in office, if there be one branch of agriculture that has not received doles, or something equal to the dole, which this is, then the Government will turn their attention to it. They are completely without a conscience in the matter.
The suggestion that the farmer could not obtain an altogether higher figure for process milk in this country, if it was thought desirable to do so, is absurd. The low figure which is charged is a deliberate one. To ask the House to come to the aid of those who utilise process milk for the purpose of manufacture is an entirely sham proposition. The House may imagine that process milk refers merely to one or two types of milk, but it does not—it includes almost every class of milk except fresh milk. Under this Order, process milk means condensed whole milk, condensed skimmed milk, full-cream milk powder, skimmed milk powder, butter milk powder, whey powder, or cream. It is clear that the handing over of these powers for a Customs duty upon imported process milk will mean an inevitable rise— probably a substantial one—in all these different types of milk.
Therefore, those municipalities that are supplementing the low incomes of large numbers of their population will be called upon to pay substantially higher figures than at the present time, and the industrial workers, many of whom are unable to purchase fresh milk except on


Sundays as a particular luxury, will even be debarred from the purchase of any fresh milk. They will turn to the condensed varieties which themselves are to have an additional tax placed upon them. The Newcastle Corporation cannot be described as having a particularly poor area at the present time. There is a large industrial population. Yet, that corporation estimates that this year it will spend upon dried milk given gratuitously for nutritional purposes to the impoverished section of the community a sum of no less than £8,600, which is equal to a rate of 1d. in the pound.
In addition to that very large consumption of free dried milk, there is a large section of the population just on the poverty line. We have a teeming population in that centre which will be directly affected by the proposal now before us. I am not interested in the satirical amusement which is being shown by certain hon. Members opposite. This is, to me, a matter of intense importance. Part of my life has been devoted to endeavouring to raise the standards of our people and as chairman of a health committee I have had a good deal to do with the introduction of methods of alleviating the effects of the gross poverty from which they suffer. Now that this attack is being made upon the standards of the many thousands in the North of England who are affected by this proposal, I am very much concerned. A conference was held a few weeks ago in King's College, presided over by one of the educational luminaries of the city, to investigate the question of nutrition, and the conclusion arrived at was that 25 per cent. of the industrial population on the North-East coast were in receipt of such low incomes, as the result of unemployment and other causes, that their nutritional standards were too low for the maintenance of adequate health. For that reason, if for no other, the House should resist the proposal. If a case were presented, supported by figures and data, to show that some measure of help for agriculture in this respect is necessary, the proper procedure would be to do what we have done in the case of sheep and oats and barley and other branches of agriculture, and give a dole from the public purse. I ask the House not to adopt the method of giving agriculture doles out of the hard-earned and slender incomes of the masses of the industrial population,

upon whom the major burden of a proposal of this kind will unquestionably fall.

11.43 p.m.

Mr. Davidson: It may be that certain hon. Members desire to get away, but this is a matter which affects Scotland materially, and I intervene on that account, and also because of what seemed to me to be a very obvious mistake on the part of my hon. Friend the Member for Consett (Mr. David Adams). He suggested that the agricultural industry had been well provided for already by the Government, and I noticed there was derisive laughter at that from many of the farming representatives opposite. My hon. Friend must, surely, have failed to see the pictures in "Picture Post" of our Minister of Agriculture, surrounded by dogs, in his poverty-stricken home. He must have failed to notice the obvious poverty of the hon. Member for Thirsk and Malton (Mr. Turton) who laughed at his representations concerning the agricultural industry. He must have overlooked the pleading speeches of agricultural representatives, the whining speeches of hon. Members opposite, when they were asking for millions of pounds of subsidy for the industry.
It is true that the agricultural industry from the point of view of the agricultural worker is a poor industry but, from the point of view of the farmer, who, to-day, is petted and subsidised more than any other class, the agricultural industry has been very well provided for by the Government. Recently there was a parade of farmers through London. We did not see any gaunt, skeleton-like men; they were well fed, and yet they are the men for whom the hon. Member has been pleading here this evening. I could take the Parliamentary Secretary to the Board of Trade—who is obviously uncomfortable at having to undertake a task which should have fallen to the Minister of Agriculture—to farming districts in Scotland and in very few areas would he find any fanners without at least a decent motor car to take him about, which is something that small employers in many other industries cannot afford.
I rise to-night because we have in Glasgow even to-day, after eight years of this Government—and the Minister of Health knows this to be true—8,000 school children still defined medically as


suffering from malnutrition, and the Order which we are now discussing is not one which will bring liquid milk into the homes of those children. On the contrary it will exact further sacrifices from the parents of those children, who are so poverty-stricken that this cheap milk is the only kind they can afford. I also add my voice to the protest which has been made against this Order being brought before the House at so late an hour and with no one on the Treasury Bench to give us a detailed explanation of it, to tell us the financial implications of it or how it will affect local authorities. It is disgraceful that the Government should put forward the Parliamentary Secretary

of another Department to explain a matter of which he obviously knows very little. The Minister of Agriculture ought to have been present to give us the benefit of his experience. I hope that my colleagues will vote whole-heartedly against the Order.

Question put,
That the Processed Milk (Import Regulation) Order, 1939, dated the first day of June, nineteen hundred and thirty-nine, made by the Board of Trade under the Agricultural Marketing Act, 1933, a copy of which was presented to this House on the twelfth day of June, nineteen hundred and thirty-nine, be approved.

The House divided: Ayes, 131; Noes, 82.

Division No. 187.]
AYES.
[11.49 p.m.


Acland-Troyte, Lt.-Col. G. J.
Hambro, A. V.
Rathbone, J. R. (Bodmin)


Adams, S. V. T. (Leeds, W.)
Hammersley, S. S.
Reed, A. C. (Exeter)


Albery, Sir Irving
Hannah, I. C.
Reid, W. Allan (Derby)


Allen, Col. J. Sandemen (B'knhead)
Hely-Hutchinson, M. R.
Robinson, J. R. (Blackpool)


Apsley, Lord
Heneage, Lieut.-Colonel A. P.
Ropner, Colonel L.


Baillie, Sir A. W. M.
Hepburn, P. G. T. Buchan-
Rosbotham, Sir T.


Baldwin-Webb, Col. J.
Herbert, Lt.-Col. J. A. (Monmouth)
Ross, Major Sir R. D. (Londonderry)


Beamish, Rear-Admiral T. P. H.
Holmes, J. S.
Ross Taylor, W. (Woodbridge)


Beaumont, Hon. R. E. B. (Portsm'h)
Hudson, Capt. A. U. M. (Hack., N.)
Royds, Admiral Sir P. M. R.


Bossom, A. C.
Hunter, T.
Ruggles-Brise, Colonel Sir E. A.


Boulton, W. W.
Hutchinson, G. C.
Sanderson, Sir F. B.


Boyce, H. Leslie
Jennings, R.
Sandys, E. D.


Bracken, B.
Joel, D. J. B.
Selley, H. R.


Broadbridge, Sir G. T.
Jones, L. (Swansea W.)
Shakespeare, G. H


Brooke, H. (Lewisham, W.)
Lamb, Sir J. Q.
Shepperson, Sir E. W.


Brown, Brig.-Gen. H. C. (Newbury)
Law, R. K. (Hull, S.W.)
Smith, Sir R. W. (Aberdeen)


Bull, B. B.
Lennox-Boyd, A. T. L.
Southby, Commander Sir A. R. J.


Burgin, Rt. Hon. E. L.
Liddall, W. S.
Spens, W. P.


Chapman, A. (Rutherglen)
Lindsay, K. M
Strauss, H. G. (Norwich)


Clarks, Colonel R. S. (E. Grinstead)
Llewellin, Colonel J. J.
Stuart, Rt. Hon. J. (Moray and Nairn)


Cobb, Captain E. C. (Preston)
Lloyd, G. W.
Taylor, C. S. (Eastbourne)


Cook, Sir T. R. A. M. (Norfolk N.)
Mabane, W. (Huddersfield)
Thorneycroft, G. E. P.


Courthope, Col. Rt. Hon. Sir G. L.
McCorquodale, M. S.
Thornton-Kemsley, C. N.


Cox, H. B. Trevor
Macdonald, Capt. P. (Isle of Wight)
Titchfield, Marquess of


Crooke, Sir J. Smedley
McEwen, Capt. J. H. F.
Tryon, Major Rt. Hon. G. C.


Crookshank, Capt. Rt. Hon. H. F. C.
McKie, J. H.
Tufnell, Lieut.-Commander R. L.


Cross, R. H.
Margesson, Capt. Rt. Hon. H. O. R.
Turton, R. R.


Drewe, C.
Marsden, Commander A.
WakeField, W. W.


Dugdale, Captain T. L.
Maxwell, Hon. S. A.
Walker-Smith, Sir J.


Duncan, J. A. L.
Mellor, Sir J. S. P. (Tamworth)
Ward, Lieut.-Col. Sir A. L. (Hull)


Dunglass, Lord
Mills, Major J. D. (New Forest)
Ward, Irene M. B. (Wallsend)


Edmondson, Major Sir J.
Moore, Lieut.-Col. Sir T. C. R.
Waterhouse, Captain C.


Elliot, Rt. Hon. W. E.
Morgan, R. H. (Worcester, Stourbridge)
Wickham, Lt.-Col. E. T. R.


Entwistle, Sir C. F.
Muirhead, Lt.-Col. A. J.
Williams, Sir H. G. (Croydon, S.)


Errington, E.
Munro, P.
Winterton, Rt. Hon. Earl


Fildes, Sir H.
Nail, Sir J.
Wise, A. R.


Fremantle, Sir F. E.
Neven-Spence, Major B. H. H.
Womersley, Sir W. J.


Furness, S. N.
Nicolson, Hon. H. G.
Wragg, H.


Gledhill, G.
O'Connor, Sir Terence J.
Wright, Wing-Commander J. A. C.


Goldie, N. B.
Palmer, G. E. H.
York, C.


Gridley, Sir A. B.
Peake, O.
Young, A. S. L. (Partick)


Grimston, R. V.
Radford, E. A.



Guest, Lieut.-Colonel H. (Drake)
Raikes, H. V. A. M.
TELLERS FOR THE AYES.—


Guinness, T. L. E. B.
Ramsbotham, Rt. Hon. H.
Lieut.-Colonel Kerr and Lieut.-Colonel Harvie Watt.


Gunston, Capt. Sir D. W.
Rankin, Sir R.





NOES.


Acland, Sir R. T. D.
Barnes, A. J.
Daggar, G.


Adams, D. (Consett)
Barr, J.
Dalton, H.


Adams, D. M. (Poplar, S.)
Beaumont, H. (Batley)
Davidson, J. J. (Maryhill)


Adamson, Jennie L. (Dartford)
Benn, Rt. Hon. W. W.
Dobbie, W.


Alexander, Rt. Hon. A. V. (H'lsbr.)
Benson, G.
Dunn, E. (Rother Valley)


Anderson, F. (Whitehaven)
Burke, W. A.
Edwards, Sir C. (Bedwellty)


Aske, Sir R. W.
Cocks, F. S.
Garro Jones, G. M.




George, Megan Lloyd (Anglesey)
Lunn, W.
Sloan, A.


Green, W. H. (Deptford)
Macdonald, G. (Ince)
Smith, Bon (Rotherhithe)


Greenwood, Rt, Hon. A.
McGhee, H. G.
Smith, E. (Stoke)


Grenfell, D. R.
Maclean, N.
Smith, T (Normanton)


Griffiths, J. (Llanelly)
Marshall, F.
Stewart, W. J. (H'ght'n-le-Sp'ng)


Groves, T. E.
Morrison, G. A. (Scottish Univ's.)
Stokes, R. R.


Hall. G. H. (Aberdare)
Morrison, Rt. Hon. H. (Hackney, S.)
Summerskill, Dr. Edith


Harris, Sir P. A.
Noel-Baker, P. J.
Taylor, R. J. (Morpeth)


Harvey, T. E. (Eng. Univ's.)
Oliver, G. H.
Tinker, J. J.


Hayday, A.
Paling, W.
Watkins, F. C.


Henderson, J. (Ardwick)
Parker, J.
Westwood, J.


Hills, A. (Pontefract)
Parkinson, J. A.
White, H. Graham


Isaacs, G. A.
Pethick-Lawrence, Rt. Han. F. W.
Wilkinson, Ellen


Jagger, J.
Poole, C. C.
Williams, E. J. (Ogmore)


Jenkins, A. (Pontypool)
Price, M. P.
Williams, T. (Don Valley)


Jenkins, Sir W. (Neath)
Ridley, G.
Windsor. W. (Hull, C.)


Jones, Sir H. Haydn (Merioneth)
Ritson, J.
Woods, G. S. (Finsbury)


Kennedy, Rt. Hon. T.
Robinson, W. A. (St. Helens)
Young, Sir R. (Newton)


Kirby, B. V.
Sexton, T. M.



Lathan, G.
Silverman, S. S.
TELLERS FOR THE NOES.—


Lawson, J. J.
Simpson, F. B.
Mr. Mathers and Mr, Adamson.


Logan, D. G.




Bill read a Second time.

FINANCE [EXPENSES OF BOARD OF EDUCATION].

Considered in Committee under Standing Order No. 69.

[Sir DENNIS HERBERT in the Chair.]

Motion made, and Question proposed,
That, for the purposes of any Act of the present Session relating to Scarce, it is expedient to authorise the payment out of moneys provided by Parliament of any expenses incurred by the Board of Education in certifying cinematograph films to be of an educational character for the purpose of the allowance of rebates of Customs and Excise duties."—(King's Recommendation signified.) —[Captain Crookshank.]

11.55 p.m.

The Financial Secretary to the Treasury (Captain Crookshank): The object of this Resolution is to open the way to a discussion of an Amendment on this subject during the Committee proceedings on the Finance Bill. The Resolution deals with the certification of educational films and is required because, at the moment, the Board of Education are empowered under Clause 7 of the Finance Bill, 1935, to deal with this certification, and by the Amendment to which I have referred we propose to ask for powers to extend the functions of the Board of Education over and above what they now do, by certifying educational films for rebates of Customs and Excise. There is involved, in form, an expenditure of public money, and that it why this Resolution is required. Hitherto the Board of Education have received a small fee upon an application for certification, and that is appropriated in aid. If the Committee accept our proposals it is intended that the same practice shall apply in this case.

Mr. Pethick-Lawrence: I believe that this proposal is supported in all parts of the Committee and, subject to the later discussion on the Finance Bill, we offer no objection to it, at this stage.

Resolved,
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise the payment out of moneys provided by Parliament of any expenses incurred by the Board of Education in certifying cinematograph films to be of an educational character for the purpose of the allowance of rebates of Customs and Excise duties.

Resolution to be reported To-morrow.

MINING INDUSTRY (AMENDMENT) BILL.

Order for Second. Reading read.

12.0 m.

The Secretary for Mines (Mr. Geoffrey Lloyd): I beg to move, "That the Bill be now read a Second time."
This is a very short Bill, and the issue is a simple one and one generally regarded as non-contentious. I do not think the House would wish me to go into great detail at this time of night, but the position is this: In the Mining Industry Act of 1920, which set up the Mines Department, there was a provision that the annual expenditure on the Department should be limited to £250,000. Since that time there have been very considerable changes in the work of the Department. First of all, there has been a general expansion of the work due to a considerable number of Acts of Parliament imposing extra duties on the Depart-


ment, and due also to the work of administering the very considerable number of trade agreements, which have now been entered into affecting some 19 countries, all of which involve a large amount of administrative work. Secondly, the Petroleum Department has been transferred to the Mines Department, and that itself means a considerable amount of extra work. If I may now come to the most important thing of all, there has been a considerable expansion in the safety organisation of the Mines Department. The expenditure on the mines Inspectorate alone, for example, has been doubled since the Department was set up.
The result of the various changes that I have indicated has been that for several years there has been a considerable difficulty in keeping within the statutory limit of £250,000. Last year the expenditure of the Department was £248,700, which, as the House will see, leaves a margin of only a few hundred pounds, and even in present circumstances it leaves the Department in the position of being in continual danger of exceeding the statutory limit of expenditure. But ,of course, there is a new factor of very great importance which really changes the situation completely, and that is the report of the Royal Commission on Safety in Coal Mines. That report undoubtedly means an extra expenditure on the Mines Department Vote, and it ought to mean an extra expenditure. The particular reason why it should do so is that it recommends a further considerable expansion of the inspectorate of the Mines Department. I will not go into great detail now—I do not think the House would wish me to do so—but for those who are not familiar with the changes in the mining industry in recent years, and speaking simply as a layman myself, I would say that one of the things that one notices at once when one goes into the matter is the great and revolutionary change that has taken place in machine mining in recent years, which makes the whole problem, both from the point of view of the organisation and production of coal and that of the Department more complicated, and there will need to be very considerable changes in the inspectorate, such as, for example, more electrical inspectors. I think the House will see that it is really necessary that this statutory maximum should now

be removed. In conclusion, I would add that, of course, the passing of this Bill will not affect in the least the necessity of submitting estimates every year in respect of all expenditure on behalf of the Department.

12.4 a.m.

Mr. George Hall: The Second Reading of a Bill dealing with any aspect of the coal industry usually means a very long Debate, but the hon. Gentleman has clearly explained the purpose of this Bill, a Bill which we welcome, which is long overdue, and which I think the Labour Government of 1929–31 would have introduced had it had the time in which to do so. I think there is a desire on all sides of this House that the work of the Mines Department should not be curtailed owing to lack of money. I think it is the only Department which has a statutory limitation of expenditure, and therefore I can say on behalf of my colleagues on this side of the; House that we welcome the Bill and will do nothing to oppose it. The hon. Gentleman referred to various aspects of the mining industry and changes that have taken place; it is a scandal that all the expenditure of the Mines Department on research amounts to only £1,750 per annum. The research into safety methods depends very largely upon the Miners' Welfare Fund. That is an indication that the money at the disposal of the Department is not nearly sufficient. We hope that the increased expenditure which must be incurred, in consequence of the changes referred to, and the important legislation which must follow the report of the Royal Commission on Safety in Mines, will mean not only an increase in safety but benefit for all branches of the industry.
This is not the occasion on which to criticise certain parts of the Mines Department with regard to research and on the statistical side. I would only mention that if one wants information as to the production of oil from coal in a large number of countries, where that work is carried on with much greater expenditure than here, one has to get it from foreign countries. With regard to statistical information about the world coal position, instead of getting it from our own Mines Department one has to get it from the American Bureau of Mines. We hope, with the increased expenditure which must follow the passing of the Bill, that


the Mines Department will be worthy of the mining industry of this country.

12.8 a.m.

Mr. Tinker: I think that everybody welcomes the Bill. The Opposition can take credit to itself for urging upon the Department the need for greater efforts for safety in mines. I hope that the Department, in asking for this additional money, will not restrict the work which it has to perform. Attention has not been given to the question of overtime, because of the lack of money and the need for greater efforts on the part of the inspectors, who seem to think that it does not require any attention. When he gets his additional money, the hon. Gentleman will, I hope, tell his inspectors to spend a little more time on this important work. If overtime were put down, accidents would be reduced.
There is another question, relating to the outlets on the long wall face. I want the inspectors to pay greater regard to that matter than they have done. Let them spend a little more time with the workmen, interview them and talk to them, and so find out their opinions on the methods of working. As it is now, the mines inspector has so much in hand that he has not time to find out the actual conditions that obtain. I trust that now he will delay a little when he goes down the pit and find out what the men think of the working conditions and, if the additional money is for the purpose of greater care and safety of the mineworkers, everyone on these benches welcomes it. Again, I take pride that we have caused so much agitation that eventually the Mines Department has seen its way to come and ask for a little more money. At any time, if it means greater safety for the people we represent, we shall give all the help we can to get it through. We have sat here to-night after twelve o'clock to see it get a safe passage and I am very glad it will go through.

12.11 a.m.

Sir Joseph Nall: I do not want in any way to oppose the main reason for this extension. My hon. Friend mentioned that the Department has now taken over the petroleum department. That is one of the side shows on which it is quite uselessly wasting money, because it has been appointing regional officers for the purpose of rationing oil fuel and petrol. The Minister of Supply designate, when

Minister of Transport, issued a Yellow Book prescribing what is to be done in economising fuel on the roads in emergencies. The organisation through the Traffic Commissioners is more than adequate, if properly used, to ration or conserve oil or fuel supplies in time of emergency. Why should the Minister of Mines duplicate that in the most extravagant and futile way? They have appointed people who do not in the least understand what they are doing, who are instructed to organise a skeleton staff, which could be expanded at any time, for no purpose whatever except duplicating what is being done by the Traffic Commissioners. My hon. Friend could very well clip off that additional expenditure which is being most uselessly and unnecessarily incurred in duplicating something which is already being effectively done by the Ministry of Transport.

MINING INDUSTRY (AMENDMENT) [Money].

Considered in Committee under Standing Order No. 69.

[Sir DENNIS HERBERT in the Chair.]

Resolved,
That, for the purposes of any Act of the present Session to remove the limitation imposed by Sub-section (2) of Section five of the Mining Industry Act, 1920, upon the total amount of the salaries and remuneration of the staff and of the expenses of the Department of Mines in any year, it is expedient to authorise the payment out of moneys provided by Parliament of any increase in the sums payable there out attributable to the removal of the said limitation." — (King's Recommendation signified.) —[Mr. Lloyd.]

Resolution to be reported To-morrow.

POST OFFICE AND TELEGRAPH (MONEY) BILL.

Order for Second Reading read.

12.15 a.m.

The Postmaster-General (Major Tryon): I beg to move, "That the Bill be now read a Second time."
The object of the Bill is to enable the Post Office to borrow the capital it re-


quires for the development of its telephone, postal and telegraph system. The Postal Services will require only £3,400,000. Telephones account for £36,200,000 and telegraphs £400,000, making a total of something like £40,000,000. The present indications are that the amount we have in hand will last till August. It was authorised by a similar Bill in 1937. The amount which we are now asking for will last till about March, 1941. The capital is required primarily, but not solely, for the ordinary expansion of the telephone service, the rate of which is three times greater than it was five years ago. It is explained also by the needs of defence and of air-raid precautions. The additional capital expenditure on telephones will not be immediately revenue-earning, and, indeed, the revenue has to carry a considerable burden in respect of requirements for future growth.
Telegraph extension has been affected by the introduction of the sixpenny telegram in 1934, and by the introduction of the greetings telegram soon after. That has been a very great help to the telegraph service which has expanded in a most remarkable way. All this growth naturally involves capital expenditure. Whereas in 1934-35 the capital expenditure of the Post Office for the year was £7,500,000, in the present year it will be £24,000,000. I hope that the House will agree to authorise this expenditure for this developing service, which is of great value to the State and helps to promote trade and employment. As I told the House the other day, we have taken on a very large additional staff, and this sum will help considerably to determine the amount of employment we give.

Mr. G. Hall: The Government cannot say that there is any obstruction from this side of the House, in view of the rapidity of the passing of all these Orders. Again we offer no objection.

12.19 a.m.

Mr. Davidson: I desire to place before the right hon. and gallant Gentleman one or two points. We do not want to limit the progress of this social service—I emphasise the expression "social service." In recent Debates the right hon. and gallant Gentleman quoted the Leader of our party as saying that the Post Office was not in any way a Socialist service.

He should have added that it cannot be a Socialist service while it is run by the present Government; run by a properly established Government of Socialists it would be a proper Socialist service. In Glasgow, the dial disc has been established by many businesses for some time, without being used. I should like to know whether part of this sum is to be used to deal with this question immediately.

12.21 a.m.

Mr. Poole: Can the Minister tell us whether any of this £36,000,000 is to be used for the development of the telephone system in the rural areas, where it is an uneconomic proposition? Is there any hope that those areas will have facilities comparable, at any rate, with those existing in more highly developed areas? As I mentioned last Friday, there are still many areas in this country which are completely cut off.

12.22 a.m.

Major Tryon: If I may have the leave of the House, I would say that certainly some of the money will be devoted to the rural areas. Since I have held my office I have been responsible for great benefits to the rural areas. I did not misquote the Leader of the Opposition. I read the words exactly as they were given in the "Daily Herald."

Bill committed to a Committee of the whole House for To-morrow. —[Captain Margesson.]

POST OFFICE AND TELEGRAPH [Money].

Considered in Committee under Standing Order No. 69.

[Sir DENNIS HERBERT in the (Chair.]

Resolved,
That, for the purposes of any Act of the present Session to provide for raising further money for the development of the postal, telegraphic and telephonic systems, and for raising money for the purpose of repaying to the Post Office Fund moneys applied there-out for such development, it is expedient—
(i)to authorise the payment out of the Consolidated Fund of such sums, not exceeding in the whole forty million pounds, as may be required for the purposes of such development or of such repayment;
(ii) to authorise the Treasury to borrow, by means of terminable annuities or by the issue of Exchequer Bonds. for the purpose


of providing money for sums so authorised to be issued or of repaying to the Consolidated Fund all or any part of the sums so issued;
(iii) to provide for the payment of such terminable annuities, or of the principal of and interest on any such Exchequer Bonds, out of moneys provided by Parliament for the service of the Post Office, or, if those moneys are insufficient, out of the Consolidated Fund." — (King's Recommendation signfied.) —[Major Tryon.]

Resolution to be reported To-morrow.

GAS UNDERTAKINGS ACTS, 1920 TO 1934.

Resolved,
That the draft of a Special Order proposed to be made by the Board of Trade

under the Gas Undertakings Acts, 1920 to 1934, on the application of the Glastonbury and District Gas Company, Limited, which was presented on the 19th day of May and published, be approved." — [Mr. Cross.]

The remaining Orders were read, and postponed.

It being after Half-past Eleven of the Clock upon Tuesday evening, Mr. Speaker adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Twenty-five Minutes after Twelve o'Clock.